Fresh CERC Order On Adani Green Energy Plea Establishes Ground Rules

In a judgement uploaded on March 27, the Central Electricity Regulatory Commission has iterated the by now established view on GST change, where it has regularly been accepting it as a change in law.

It has also allowed restitution to developers accordingly, payable by implementing agencies SECI and NTPC respectively, subject to the providing of detailed invoices and calculations that  establish the exact amount due. Also, in a nod to the agencies view that any liability is actually that of the end users, ie, the discoms buying the power, the commission has stuck to its view that the original liability is the agency, without denying that back to back arrangements with the discom is a reality too.

Finally, it continues to stick to the stand on carrying costs, or interest costs on the amounts due, that it is not payable. Because such a provision does not exist in the standard PPA that has been signed between generators and implementing agencies in almost all cases. The present ruling thus, pretty much establishes a template for what to expect, for any more developers going through the paces of the appeals system.

Besides these, we have also noted a clear aversion to allowing for any impact of GST on O&M (Operations and Maintainance)  too, as that has been taken as a post commissioning activity, not covered by the PPA again. Thus, the risk there is completely the developers.

The ruling came on a plea filed by two Adani Green Energy subsidiaries, Wardha Solar (Maharashtra) Private Limited (WSPL) (Versus SECI and discoms) and Parampujya Solar Private Limited (Against NTPC and discoms). While the WSPL plea involved solar developments in Telangana, the plea from Parampujya Solar was for its projects in Karnataka. The commission had clubbed the two appeals together considering the similar nature of the issues in both.

It is interesting that in most cases, between filing and resolution, the total time taken at the commission has been about one year or more, which is not too bad. However, where these cases come up through the state regulators route followed by appeals, its a real cost in terms of time and resources. With clear lines in the sand established now, especially with respect to the most common issues, perhaps there is a case to fast track all such pleas further.