TNERC Allows TANGEDCO To Get Away With 6% Interest On Delayed Payments

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The Tamil Nadu Electricity Regulatory Commission (TNERC) has recently ruled in favour of a wind energy producer Rajaguru Spinning Mills Private Limited, directing the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to make payments to the producer with 6% interest per annum within a month.

Aggrieved at delayed settlement of invoices pertaining to a wind power purchase agreement signed with TANGEDCO in 2018, Rajaguru Spinning Mills had petitioned TNERC to request the receipt of Rs.2,34,90,014 (Rs.2,02,80,789 principal amount plus 18% interest) from the discom.

Besides stating that TANGEDCO was experiencing financial constraints and that being directed to pay the claim would adversely affect its fund flow, the discom failed to offer TNERC any other justification for the delay in the payment.

Rajaguru Spinning Mills further submitted to TNERC that inspite of agreeing for settlement of interest @ 6% per annum, the dues had not been settled and still Rs.8 crores were due. TANGEDCO claimed that the matter had been referred to REC and sought 15 days’ time from the commission to make the payments. TNERC granted the same with a stern warning that in case of non-compliance, the difference in interest would be recovered from the concerned officers.

“However, we find no compliance has been made till date and even the status report has not been filed. We strongly express our displeasure in the manner, the TANGEDCO has handled the matter,” stated the commission, reprimanding the discom officers for their “total lethargic attitude…against their own institutional interest.”

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TNERC thus gave the following judgement: “TANGEDCO is directed to verify the claim of the petitioner and make payment towards interest @ 6% per annum to the petitioner within one month from the receipt of this order, after deducting payments already made. If not paid within one month, the respondent shall pay interest @ 12% per annum, in line with the applicable Tariff Orders of the Commission after deducting the payments already made.”

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“Any further delay in settlement will not be countenanced and the amount paid over and above @ 6% interest will not be allowed as pass through in the ARR in case of failure to pay the dues at 6% within the deadline of one month from the date of this order and in such case TANGEDCO will have to bear the difference in the interest on its own,” warned the commission.