APTEL Overrides TNERC Judgement In Case of Solitaire BTN’s 100 MW Solar Plant

The Appellate Tribunal For Electricity (APTEL),has ruled strongly in favour of the solar developer Solitaire BTN (BTN) against the state regulator of Tamil Nadu, discom, transmission firm. In overriding the previous judgement of the state regulator, APTEL has probably shown up the risks of working directly with state discoms like nothing else. The judgement was delivered on July 5, and the full text can be read here.

The case, involving Delhi-based Solitaire BTN Private Limited versus the Tamil Nadu Electricity Regulatory Commission (TNERC), Tamil Nadu Generation And Distribution Corporation (TANGEDCO), and Tamil Nadu Transmission Corporation (TANTRANSCO) among others, is a story of poor communication, compounded by lack of accountability from the utilities involved. If anything, it makes a strong case to start holding individual officials accountable for such a poor approach.

The case background

 On June 15, 2017, BTN Solitaire Solar responded, to a 1.5GW TANGEDCO tender to supply solar power to the state, by establishing projects n the state. It identified three locations in Virudhunagar district of Tamil Nadu, to supply a total of 150 Mw of solar power.

On July 06, 2017, a negotiated tariff of Rs 3.47 /kWh was finalised. On September 28, 2017, the  PPA with TANGEDCO was signed for 100 MW of power, after the firm scaled back its plans to 100 MW due to issues with land acquisition.

The PPA had the usual obligation to commission the project’s total capacity on or before 24 months from the date of signing the PPA dated September 28, 2017, which was September 25, 2019.

What happened:

Now, the story gets really interesting. As the PPA specified that it would be the developers job to arrange for evacuation of power, with TANTRANSCO bound to support it, BTN made a request for the same with them, and received a ‘conditional’ approval. In the sense that the firm made it clear that approval was subject to at least 4 other transmission enhancement projects being completed. Amazingly, 2 of these pending works were not completed even on March, 2021, months after even the extended SCOD of the project. !This was the first point of the TN utilities that was shot down by the APTEL bench, as they had tried to go back to deny this conditional approval.    

To quote from the judgement, “These assertions (Of being able to evacuate the entire 100 MW capacity) are not only false to the knowledge of the persons that have deposed the affidavits, these assertions are not sustainable upon a simple reading of the diverse letters and internal reports that clearly conclude that it is not possible to evacuate the entire 100 MW Contracted Capacity, even as of today”

The TNERC Order

To the issue of the state commission (TNERC) denying any relief in terms of extension due to the delays, the APTEL bench noted that “The PPA was signed on 28.9.2017 and the maximum permissible time of 34 months ended on 27.07.2020. The blanket exemption of 5 months granted by MNRE is for the lockdown period from 25.03.2019 – 24.08.2020 and this period fall in the PPA period. Therefore the decision of the State Commission not to allow relief to the Appellant on the ground that the Covid 19 pandemic occurred outside the period of PPA is wrong and set aside. “The maximum time of 34 months takes into account the extra time before bank guarantees are encashed, and further, for payment of liquidation damages. Thus, this order of the state commission was simply set aside.

On Force Majeure In This Case

On the applicability of Force majeure clause by BTN, the court noted that “the Respondents TANTRANSCO/ TANGEDCO were obligated to provide evacuation of entire output of 100 MW (full rated capacity) of the solar PV plant of the Appellant but the Respondents have not fulfilled the obligation. ” So it allowed the same, since it was not in control of the appellant.

Thus, the bench allowed BTN an extension of ten months’ time on account of Force Majeure event of unavailability of transmission system and further five months extension of time on account of Force Majeure event of lockdown due to corona pandemic.

Accordingly the scheduled commissioning date was extended from 27.09.2019 to 27.12.2020 without the encashment of Performance Bank Guarantee and payment of Liquidated Damages.

The bench also observed that  the entire capacity of 100 MW achieved readiness on 29.10.2020 and received CEIG certificate for the same on 19.11.2020 but was not synchronised with the grid for reasons beyond the control of the Appellant. The fact that the balance capacity of 50 MW was declared ready for commissioning on 29.10.2020/19.11.2020, convinced the bench that the appellant made available the entire capacity of 100 MW of the
Appeal No. 67 of 2021  solar PV plant by the extended Scheduled Commissioning Date of 27.12.2020.

The Financials

Thus, it ordered TANGEDCO to forthwith return the Performance Bank Guarantee of Rs. 20 Crores and Additional
Performance Bank Guarantee of Rs. 7.6 Crores to the Appellant without any delay along with the cost of renewing such bank Guarantee.

Finally on the issue of tariff applicable, where the state utility had argued for fresh negotiations, the bench granted full tariff of Rs. 3.47 per unit for the balance 50 MW w.e.f. 08.02.2021 onward i.e. the date on which this capacity was synchronised with the grid with Respondent TANGEDCO to pay the Appellant the differential tariff withheld along with carrying cost calculated as per the late payment surcharge as provided for in the PPA/TNERC Regulations/ CERC Regulations.

While we have captured the key points of the judgement, a deeper reading of the whole case will showcase just how tortuous a journey the solar developer has traversed. And at not time has this been a case of poor intent from the developer, as state utilities are wont to blame. That someone who has invested in hundreds of acres of land , project guarantees, additional expenditure to provide transmission utility with land for a sub station of its own account would be accused of having poor intentions and not being serious is a travesty of doing business. The inability of state firms to  appreciate the financing conditions that are subject to unambiguous commitments in terms of connectivity and evacuation is also shocking. It would be the easiest thing to attribute ulterior motives to the actions of the officials, clearly unafraid ot eh massive losses their actions force upon private players. We will desist from that here, as the complainant will obviously not want to say anything, now that it has received justice at the APTEL bench.