CERC Orders MPPMCL & DMRC to Compensate ACME Solar

Following the Central Electricity Regulatory Commission’s (CERC) decision pronouncing that solar developers are entitled for compensation in lieu of greater expenses incurred ever since the GST was introduced, solar developer ACME Jaipur Solar Power has asked the Commission to give MPPMCL and DMRC instructions on how to pay the late payment and rate. 

The Central Electricity Regulatory Commission (CERC), has ruled in favour of the solar developer, and directed the Madhya Pradesh Power Management Company (MPPMCL) and Delhi Metro Rail Corporation (DMRC) to settle the safeguard duty claims and pay the delayed payment penalty within 30 days.

A request for proposals (RFP) for the building of three 250 MW solar projects totaling 750 MW was released by Rewa Ultra Mega Solar (RUMSL) in March 2013. ACME Solar Holding won the bid to build one of the units.

To complete the project, ACME Solar established two different power purchase agreements (PPAs) with MPPMCL and DMRC in 2017 and established a special-purpose vehicle called ACME Jaipur Solar Power.

In July 2018, the government slapped a safeguard duty on solar cell imports. The effective rate of duty at the time was 25%.

Based on a “Change in Law” event, ACME filed a petition in 2019 asking for reimbursement for the excessive expenditures incurred as a result of the application of the safeguarding responsibility.

According to ACME, additional expenses of Rs. 297.6 million were incurred as a result of the “Change in Law” to pay for the Customs bonds necessary to import goods.

The developer was ordered to provide the respondents with access to any relevant information demonstrating a clear connection between the projects and the importation of products after the Commission found that the safeguard duty’s implementation fell under the PPA’s “Change in Law” clause.

During the hearing, DMRC made it plain that it was already regularly paying the petitioner and that MPPMCL was the only party who was disobeying the order.

The amount of Rs. 297.6 million could not be resolved, according to MPPMCL, who verified that there was no connection between the claim and the supplemental documents.

The reason the petitioner was unable to make the payments was that it had defied the Commission’s earlier order’s directive and had failed to furnish the necessary evidence.

The developer has paid the Customs officers a total of Rs. 297.6 million, the Commission observed. Additionally, MPPMCL was required to pay the developer for these sums because of the previous judgment made by the Commission and the fact that there was an actual cash flow of Rs. 297.6 million.

The claim’s reconciliation and late payment fees were therefore to be handled by the PPA, per the Commission’s instructions to MPPMCL and DMRC.

Last year (2021), The Central Electricity Regulatory Commission (CERC)  gave a judgment in favor of Mahindra Renewables Private Limited, accepting most of its pleas for compensation from M.P. Power Management Company Limited (MPPMCL) and Delhi Metro Rail Corporation (DMRC) on account of a ‘Change in Law’ event in the power purchase agreement (PPA) executed among the three parties in 2017.