APTEL Withholds KERC Order On Incremental Solar Tariff

APTEL Withholds KERC Order On Incremental Solar Tariff

The Appellate Tribunal For Electricity (APTEL) in a recent judgment dismissed a petition by a Karnataka discom to not allow incremental tariff to compensate a solar energy generator on account of ‘change of law’ events.

The petitioner Hubli Electricity Supply Company Limited (HESCOM) had earlier moved APTEL seeing its intervention against an impuged order of the Karnataka Electricity Regulatory Commission (KERC). As per the KERC order, HESCOM was asked to pay compensation to Adyah Solar Pvt Ltd, a solar company through an incremental solar tariff model.

Case History

Adyah Solar had earlier set up a 50 MW solar power plant at the Pavagada Solar Park in the Tumkur district of the state. HESCOM signed a Power Purchase Agreement with the company. However, in 2018, the Finance Ministry introduced Safeguard Duty (SGD) and Integrated Goods & Services Tax (IGST) on the import of solar modules, hiking its input costs.

The solar power generator approached the KERC, asking it to declare the move as a “change of law” and compensation accordingly. KERC accordingly declared these as a change of law event and said that the solar company was entitled to around Rs 21.75 crore as compensation. The Commission further awarded an incremental tariff of Rs 0.39 to the respondent for the entire period of 25 years of the PPA in addition to the tariff of Rs 2.91 per unit, towards reimbursement of additional capital cost of Rs 21.75 crore.

The petitioner-HESCOM told APTEL that the tariff determined by the Commission would be highly excessive and should not be permitted. The APTEL, however, rejected the submissions of the Karnataka discom and maintained the order given by the state power regulator in the case.

APTEL Rejects Demand

“It was argued on behalf of the Appellant that the compensation sought by 1st respondent would stand at Rs. 31,75,76,295/- whereas tariff determined by the Commission would translate to Rs. 67,30,32,750/- which is highly excessive and can not be permitted. The argument has been noted only to be rejected. The reason is that the compensation is not being paid to the 1st respondent in one go. The 1st Respondent would receive the compensation by way of increment in Tariff by Rs. 0.39/- per kWh over a period of 22 years,” the APTEL order said.

It also added, “Therefore, the Commission arrived at this figure by taking into account the time overrun of money during these 22 years which makes the actual incremental tariff receivable by first respondent higher than the compensation sought by it. Considering the above discussion, we do not find any error or infirmity in the impugned order of the Commission. The appeal is devoid of any merit and is hereby dismissed.”