CERC Directs SECI to Compensate TPREL Irrespective of Dues from DISCOMS

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The Central Electricity Regulatory Commission (CERC) has given a nod to Tata Power Renewable Energy Limited’s ( TPREL) claim for compensation caused by change in law events due to enactment of GST Laws.

TPREL had entered into a PPA with SECI and claimed compensation of Rs. 48,88,44,968 along with the carrying cost towards compensation for change in law during the construction period.

SECI, on other other hand, had contended that its compensation to TPREL relies upon beneficiary DISCOMs, from which it is due for compensation itself. The Commission, however, has opposed SECI’s claim by saying that regardless of whether the DISCOMs recompense SECI or not, it must continue to meet its payment obligation towards the project developers, TPREL in this case.

The additional costs have been another issue of contention, which is that any such costs incurred on O&M expenses are to finally be passed onto the developer. The CERC has also rejected this claim and said that SECI should compensate for any such additional costs incurred.

In a nutshell, the CERC has given a nod to TPREL’s claim for SECI to recompensate it on account of change in GST laws. The Commission has further asked SECI to make compensation to TPREL for additional costs incurred. Under all circumstances, SECI has an obligation to compensate the project developer whether SECI gets its dues from DISCOMS or not.

The situation once again brings into light the vexing issue of large outstanding dues from DISCOMS to generators.  It also underlines that the trading margin SECI earns, is well earned, considering the risks it mitigates for generators that deal with it. In recent judgements where the trading margins of 7 paise per unit have been questioned, regulators have repeatedly stressed that the margin is subject to SECI paying on time, otherwise it runs the risk of a trading margin of 2 paise/unit like power trading exchanges .

You can access the judgement here: https://cercind.gov.in/2022/ROP/179-MP-2020_110122.pdf