Avaada Plea on Waiver of Charges Due To Supply Disruptions Fails To Work With CERC

By Prasanna Singh/ Updated On Wed, Sep 14th, 2022

Highlights :

The case before the CERC was eventually decided against Avaada, with the bench taking the view that MTOA/LTOA transmission agreements do not have any force majeure provisions.
Avaada’s is likely to be among a long list of developers who will face similar challenges due to sourcing delays for modules.

Avaada Plea on Waiver of Charges Due To Supply Disruptions Fails To Work With CERC

In an order last week, the Central Electricity Regulatory Commission (CERC) has ruled against a plea by Avaada Energy on charging of transmission charges for a 240 MW project during the period of delay.

Avaada Energy had made a plea asking for extension of the start date of Medium Term Open Access by the Central Transmission utility. Interestingly, among the reasons cited for the delay, Avaada has quoted delays in supplies from China during December to March ’22, rise in prices and shipping costs, and the failure of domestic suppliers to provide enough alternatives or stick to commitments.

The issue arose after Avaada was able to commission only 125.75 MW of the committed 240 MW by the start date of the MTOA, that was Feb1, 2022. It had therefore asked for extension of time for the balance 114.25 MW by May 23, 2022. Avaada had won the right to sell the power after emerging as the winning bidder for the project back in 2020, when the HPPC issued it a letter of intent on May 22, 2020.

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Avaada had earlier managed to get a stay on charges levied for the period by CTUIL through APTEL, where the APTEL bench , while putting a stay, had made it clear that it would wait for the final CERC order on the applicability of such charges.

The CERC however decided against Avaada, noting that at no stage did the company issue any notice regarding impending delays or such force majeure events. Moreover, transmission agreements do not have any such provision in any case. In fact, it noted that such agreements clearly state that charges will be charged(and will need to be paid) in case of non-utilisation also.

It did mention that transmission charges should be billed to the buyer (Haryana Power Purchase Centre in this case) only after the commercial operation date of the generating station. Thus, the CTUIL bills raised that corresponded to the capacity not commissioned yet were contrary to the agreement. Thus, the CTUIL was also asked to revise said bills.