APTEL Overturns BERC Order In 5 MW RE Project, Restores tariff Of Rs 10.90/kWh

The Appellate Tribunal for Electricity (APTEL) has recently overturned Bihar Electricity Regulatory Commission’s (BERC) order that rejected a renewable project developer’s plea for extension of the Commercial Operation Date (COD) due to delays created by the procurer.

In March 2013, Avantika Contractors India Limited (the project developer) entered into a Power Purchase Agreement (PPA) with Bihar State Power Holding Company Limited (BSPHCL, the Procurer) for the development of a 5 MW renewable energy plant.

By virtue of the provisions of the State Policy and the PPA, Avantika Contractors was to be entitled to the levelized tariff of Rs. 10.90/kWh, provided it achieved the Commercial Operation Date (COD) by March 2015. Over the course of the development of the 5 MW plant, Avantika approached IREDA for grant of loan facility for funding the project but received the undertaking for the same by BSPHCL in a “leisurely manner.” The developer further contended that it suffered due to the lack of effort on the part of BSPHCL to create the evacuation infrastructure required for the project.

Avantika petitioned Bihar Electricity Regulatory Commission (BERC) for the grant of extension of COD, attributing the delay entirely to BSPHCL, which the commission rejected. Following this, the developer could not achieve the COD by the stipulated date of March 2015 and lost the right to be paid levelized tariff of Rs.10.90/kWh as would have been applicable if its prayer for extension of COD had been accepted.

Avantika then approached APTEL to state its case against BSPHCL and BERC. After deliberating on the facts of the matter, APTEL observed: “We find the approach of the State Commission wholly unfair…the appellant has demonstrated by sufficient material on record that it was unable to achieve COD on 31.03.2015 on account of roadblocks created by the second respondent [BSPHCL]. There is no explanation worth the name for lack of cooperation in arrangement of the funds for the purposes of the solar power project developed by the appellant. Further, there is no explanation as to why the second respondent having asked the appellant to cooperate by creating evacuation infrastructure on its behalf failed to give the necessary approvals despite it being pursued and persuaded by the appellant over a prolonged period.”

Finding merit in Avantika’s appeal, APTEL set aside BERC’s order rejecting the developer’s petition for extension of COD. “The extension of time for attainment of COD till 31.01.2016 is hereby granted. That is the date on which the COD was achieved and therefore, it shall be deemed that the project had been developed and COD achieved within the four corners of the PPA that was executed on 01.03.2013. In the result, the appellant would be entitled to the levelized tariff of Rs.10.90/kWh which was the tariff applicable for the corresponding period,” said APTEL.

The tribunal added, “Needless to add the second respondent [BSPHCL] will be obliged to pay the differential. Of course, the appellant will also be entitled to the carrying cost as a consequence to the change of the tariff in terms of this decision. For such purposes, the appellant will be entitled to raise a proper invoice which shall be honored by the second respondent subject, however, to the remedy of the appeal against this judgment.”

“We must record that the conduct of officers of the second respondent responsible for taking timely decisions has been far from satisfactory. This has added to the delay in development of infrastructure which, but for the lethargy and ineptitude shown, might have come up much earlier to serve the interests of the State and the public at large. The second respondent must do some introspection and adopt better methods and operating procedures if it is live up to the legislative promises of efficiency and good performance. We would expect it to carry out internal inquiry to fix responsibilities for these delays to ensure accountability,” APTEL further said in its reprimand of BERC.