In Relief For Developers, TNERC Revises Order On Solar Tariff By Changing Accounting Norms

In a relief to the developers involved, Tamil Nadu Electricity Regulatory Commission (TNERC) has revised solar tariff for FY 2017-18 on an Appellate Tribunal for Electricity (APTEL) remand matter filed by National Solar Energy Federation of India Limited (NSEFI), the latter has reported.

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In its latest order, TNERC has revised tariff from Rs 5.10 to 5.68/kWh, matched with the then Central Electricity Regulatory Commission (CERC) generic tariff, mainly by revising the depreciation and Operation & Maintenance (O&M) cost norms. Specifically, by moving from straight-line depreciation method, used earlier, to the accelerated depreciation benefit method, which was the prevalent method for solar projects in general across most states.

Walwhan Renewable Energy Limited appealed to APTEL against a suomotu order issued by TNERC determining tariff for solar power for FY 2016-17. After considering the facts of the matter, APTEL found merit in some of the appeals and consequently set aside the order passed by TNERC, directing the latter to pass the consequential order within three months from the date of the judgement. For this, APTEL instructed TNERC to re-compute depreciation by following methodologies and principles prescribed and followed by all other state electricity regulatory commissions and CERC i.e. differential depreciation approach. "We further direct the State Commission to ensure that aggregate depreciation provided is not less than the 90% of capital cost," ordered APTEL.

Following this, in 2020, TNERC filed a civil appeal before the Supreme Court of India against APTEL's judgment of APTEL, seeking stay of the judgment. The court dismissed the appeal, stating, "All issues are left open."

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TNERC then passed its latest order re-determining the tariff with the following tariff determinants in arriving at the tariff fixed by the Central Commission:

The order is significant as it aligns Tamil Nadu with other state regulators when it comes to calculating tariffs on projects. A significant deviation as the one attempted by TNERC earlier could have set a precedent for regulators to follow suit, and created a serious issue for developers involved who had followed the well laid out process from CERC and other forums.