Avaada Slips Up As CERC Upholds Cancellation Of Connectivity in MP Wind Projects

The Central Electricity Regulatory Commission (CERC), in an order dated March 30 involving Avaada Energy and Central Transmission utility (CTUIL), passed an order that censures both the parties involved. For Avaada, the blow is heavier because the CERC eventually upheld the decision of the CTUIL to cancel the connectivity license accorded to Avaada for its 200 MW wind energy projects in Dhar, Madhya Pradesh.

• Petition Background:
  • AEPL filed this petition seeking to quash letters from the Central Transmission Utility of India Limited (CTUIL) that canceled AEPL’s in-principle connectivity for 50 MW and 150 MW capacities.
  • The cancellation was due to AEPL’s alleged failure to submit the requisite Bank Guarantee (CONN-BG2) within specified timelines. AEPL had deposited only Rs 3 crore instead of the demanded Rs 21.88 crores in anticipation of conversion of the region to REZ.
• Key Issues Raised by AEPL:
  • AEPL argued that the Rajgarh Substation would soon be declared a Renewable Energy Zone (REZ) to avoid the need for additional Bank Guarantees.
  • AEPL contended that CTUIL’s actions were arbitrary, discriminatory, and not consistent with the Grid Network Access (GNA) Regulations, 2022.
  • AEPL claimed that similar projects were treated differently, leading to inequity. This was subsequently disproved by CTUIL by sharing data of other firms in the region.
• CTUIL argued that AEPL failed to comply with GNA Regulations by not furnishing the required CONN-BG2 within the prescribed period. CTUIL insisted its actions were mandatory under these regulations and simply a logical following of the law.

   

  Interim Developments:

  AEPL approached the Delhi and Madhya Pradesh High Courts, which temporarily stayed the cancellation of connectivity until the petition could be addressed by CERC.

• CERC’s Observations and Directives:

CERC noted that Avaada’s insistence on arguing that as the region was about to be declared an REZ could not be used to defy the rules on due timelines for payment. It also castigated the CTUIL for allowing an extension beyond the 30 day period in the first place, creating ‘false hope’ within Avaada for a resolution as it was seeking, ie at a lower cost.  However, even as it upheld CTUIL’s right to cancel,  it has kept the door ajar for a settlement between the two by noting that ” with regard to the prayers of the Petitioner to declare Rajgarh as CTS or
augmentation without ATS, we have already noted above that CTUIL has to identify ATS out of the augmentation under the provisions of the Regulations. We have also noted the submissions of the Petitioner about the lapse on the part of CTUIL in delaying the revocation of connectivity of the Petitioner, giving rise to the Petitioner’s unwarranted confidence that it could delay the submission of Conn BG2 further. We also convey our displeasure to CTUIL over the delay in revoking the Connectivity and direct it to comply with the regulations in letter and spirit to minimise avoidable disputes and raise unreal expectations among the Connectivity applicants”.