Tata Steel Slips Up On RPO Obligations In Jharkhand, Penalised

In an order involving Tata Steel and the JSERC versus Green Energy Association, the Appellate Tribunal For Electricity (APTEL) has ruled against the exemption from Renewable Purchase Obligation (RPO) for Tata Steel during the years 2011-14. The main issue was Tata Steel’s contention that its captive cogeneration exceeded the RPO requirement, an argument that managed to convince the Jharkhand Electricity Regulator(JSERC)  as well in granting them exemption.

However, the Green Energy Association argued that the exemption was improper as TSL did not face difficulty in procuring Renewable Energy Certificates (RECs), which were available since June 2012. Moreover, they argued that equating co-generation from fossil fuel with renewable energy was also an erroneous argument. JSERC’s own argument that RPO relaxation was based on precedent, as SAIL’s Bokaro Steel Plant for overlapping financial years, or a case involving Century Rayon ruling was also shot down.

Importantly, all though this period, even though access to renewable energy was not a straightforward matter, there was the availability of RECs which made Tata Steel’s failure to purchase those to set off consumption wrong.

Aptel’s clear stand was that something that was bad in law cannot be considered precedent, and that is the case here. The bad law being a previous judgement by MERC that had exempted captive co-generation plants from RPO obligations as long as energy generated from co-generation exceeded their RPO obligations. Based on a subsequent judgement (Lloyd Metal) Aptel held that RPO obligations can, therefore, be fastened on captive power consumers. Such RPO obligations, to procure and consume power from renewable sources of energy, can neither be adjusted nor set off against the quantum of power consumed from co-generation plants based on fossil fuel.

Citing regulation 9 and 10 of the RPO Regulations, which mandate penalties for non-compliance with RPO. APTEL concluded that JSERC erred in exempting TSL from its RPO obligations and directed JSERC to determine the amount for non-compliance and ensure TSL deposits it for the purchase of RECs.