For The Third Time in August, APTEL Sets Aside KERC Order

For the third time this month, the APTEL (Appellate Tribunal For Electricity) has seen it fit to set aside an order of the Karnataka State Regulatory Commission (KERC). While the broad issue is the same, the beneficiary this time is Hyderabad based Sirwar Renewable Energy Private Limited, a firm that had set up a 2 MW solar power plant under a scheme of the Karnataka government, issued in 2014.

After getting approval to set up a 2 MW plant, the developer signed a PPA with the Gulbarga Electricity Supply Company Limited (GESCOM) on July 1, 2015. Accordingly, as per the rules prevalent then, the scheduled commissioning date for the project was set for 18 months after the PPA, or December 31, 2016.

The land owner, who had formed the company for executing the project, then proceeded on a merry run around of getting government permissions, with the last of these, the supplementary power purchase agreement that recognised the entity and allowed the project to get access to bank funds was completed only on August 28, 2016.

Even the regular evacuation approval for power generated was given only on September 6, 2016. Even then, the approval of the single line diagram for connecting the project with an 11 KvA line to the nearest sub station of KPTL was given only on Dec 2, 2016, after multiple follow ups. Land for the transmission bay was only formally made available on Dec 9 , 2016 by KPTL.

Finally, with just one approved equipment vendor, MEIL, with whom the applicant placed the equipment order on 27 September, even the equipment delivery was not made on time. Killing off the last chance to have the project ready by the deadline of Dec 31, 2016. Eventually, the applicant did manage to have the project running and certified on Jan 21, 2017. That didn’t prevent it from being told to approach the state commission for getting the delay ratified.

The state commission (KERC)  duly dismissed the petition and held that the Appellant was not entitled to any reliefs sought by the Appellant. The Commission further held that the Appellant was entitled to a tariff of Rs. 6.51/- (Rupees Six and Paisa Fifty One Only) per unit, per varied tariff as applicable on the date of commissioning of the Appellant’s plant, as fixed by the Commission in the Order dated 30.07.2015 for the term of the PPA, as per Article 5.1 of the PPA. The Commission further held that the Appellant was also liable to pay damages including liquidated damages as provided under Article 2.2 and 2.5.7 of the said PPA. In effect, condoning the 15-16 months of delay caused by govt agencies, but rushing to punish a 21 day delay by the developer.

The APTEL bench noted that a scheme that was meant to support farmers has effectively become a curse for those who opted for it, thanks to the approach and attitude of government agencies that caused untold delays at every stage, and finally, the KERC, which has chosen to repeatedly ignore advise to the contrary and consider these force majeure events. Thus, the appeal was allowed and the impugned order set aside. The commission also confirmed that the developer is entitled for Rs. 8.40 per unit in terms of PPA from the date of commissioning the solar power plant. It directed the GESCOM to pay the difference of the tariff paid per unit from the date of commissioning of the Judgment in  plant along with late payment surcharge in terms of PPA within one month from today. Zero liability for the developer to pay any damages and so also liquidated damages.

Of late, KERC in particular has repeatedly been on the wrong end of APTEL decisions, making its own case for more independent and competent appointments.