CERC Rejects Punjab Discom’s Plea To Penalize Adani Green Over Delays

CERC Orders Compensation To NTPC Over 'Change Of Law' Event

The Central Electricity Regulatory Commission (CERC), in its latest judgement declined the petition of Punjab State Power Corporation Limited (PSPCL) against Adani Green Energy. The Punjab discom had pleaded with the CERC to reduce the tariff of 50MW of a Gujarat-based wind power project developed by Adani Green due to the delay in the commencement of the project. 

PSPCL, in its petition before the CERC, asked the Commission to reduce the tariff by Rs 0.50 paisa/unit per day for the delay. Adani Green Energy MP Limited (AGEMPL) had earlier participated in a bid issued by the Solar Energy Corporation of India (SECI) for a 50 MW wind power project. The project is situated in the village of Dayapar in the Kutch district in Gujarat. The agreed tariff for the project was Rs 2.65 per unit for 25 years. 

SECI had issued the Request for Selection (RfS) on May 31, 2017. Its scheduled commercial date of Operation (SCOD) was on May 3, 2018. It was again extended to January 3, 2020. On the other hand, the project was commissioned on March 5, 2020. PSPCL, in its petition, attributed this delay in commissioning and demanded imposing a penalty on Adani Green against such delays through reduced tariff. The CERC, in its judgement, however, gave relief to Adani Green after hearing from all parties.  

The CERC, in its order, said that the renewable company could not oblige to the SCOD due to ‘force majeure events’. “We note that there was a delay in providing LTA as the transmission system was not ready, and SECI vide letter dated 21.11.2019, on account of the delay in the operationalization of Long-Term Access (LTA) by the Central Transmission Utility (CTU), revised the SCoD for the project to 03.01.2020 or COD, whichever is earlier. We also note that SECI has recorded that PSPCL was also informed about the revised SCoD qua letter dated 26.11.2019.”

Going by the rules 

“…in case the project is not commissioned within 18 months from LoA, SECI is entitled to encash the PBG proportionally as Liquidated Damages for the delay in Commissioning up to six (6) months. In case the commissioning of the project is delayed over six (6) months, the tariff (2.65/kWh) will be reduced at the rate of 0.50 paise/kWh per day of delay. The maximum time period allowed for the commissioning of the full project capacity with encashment of PBG and reduction in the fixed tariff is limited to 27 months from the date of LoA. For any delay beyond 27 months, the PPA capacity stands reduced/amended to the Project Capacity Commissioned,” the CERC order said.

CERC also pointed out that there was no dispute between the parties on the issue of the levy of liquidated damages imposed by SECI on Adani Green for the 62-day delay in the commissioning of the project.

“ However, the only issue that is pertinent to deciding is whether the Petitioner is entitled to a reduction in tariff in terms of the PPA dated 29.12.2017. PSPCL has claimed that the project cannot be commissioned after 27 months from the date of issuance of the LoA, and the project being commissioned on 05.03.2020 amounts to a violation of Article 4.5.6 of the PPA. Per Contra, the Respondents submitted that the 27-month deadline cannot be made applicable without considering the extended SCoD date. With the extended SCoD being 03.01.2020, the timeline for computing liquidated damages/reduction of tariff will start from there,” the order said. 

Final judgment 

In its final judgment, the CERC said, “We are of the considered view that the six (6) months period will be counted from the date of the revised SCoD date, i.e., 03.01.2020. Reduction in tariff can only be applied with effect from 03.07.2020. AGEMPL has already commissioned the project on 05.03.2020. SECI has already levied a penalty for the delay and has issued Commissioning-cum-COD certificate and hence ratified the delay by AGEMPL. AGEMPL cannot be saddled with additional penalties as it has already paid liquidated damages to SECI in terms of the provisions of the PPA. Hence, PSPCL’s claim for tariff reduction is devoid of merit in terms of the PPA.”