The Andhra Pradesh Electricity Regulatory Commission (APERC) has directed the state distribution company (DISCOM) to pay a tariff of ₹2.93 (~$0.036)/kWh for the power purchased from a 2.3 MW wind power project from the commercial operation date of the project until the date of disconnection.

Danu Wind Parks had filed a petition seeking the Commission to direct the DISCOM to pay a tariff of ₹4.76 (~$0.058)/kWh as agreed by the parties in the power purchase agreement (PPA) for the period from the commercial operation date (March 20, 2018) up to the date of disconnection (September 13, 2020).

The DISCOM argued that it has not paid the producer because Commission had not approved the PPA.

The Commission asked the DISCOM to pay the amount within one month from the order date. It added that if the payment is not made within the stipulated time, the amount will carry an interest of 12% per annum until the payment date.

Background

Andhra Pradesh Southern Power Distribution Company (APSPDCL) had issued a letter to the wind power generator, stating that the developer was permitted to declare the commissioning date of the 12.3 MW project, which was commissioned on March 20, 2018, in the Anantapur district of Andhra Pradesh, with effect from the date of synchronization of the first unit of the project to the grid, i.e., from March 20, 2018 subject to receipt of consent for the PPA from APERC.

The DISCOM submitted that it had agreed to make the payments for the procured power only after receiving the consent of the PPA from the Commission. Since the Commission had not granted the consent, they were not liable to pay for the power received from the wind power generator.

Commission’s analysis

The Commission observed that the letter cited by APSPDCL does not suggest that the DISCOM had taken the stand that payment for the power received will only be made if this Commission grants consent for the PPA.

In any event, irrespective of the stand taken by the DISCOM, the Commission held in an earlier case where the licensee had received power in pursuance of the PPA, the provisions of Section 70 of the Indian Contract Act apply. Also, irrespective of whether the PPA is approved or not, a new relationship between the parties will form the basis for a claim under Section 70 of the Contract Act.

The Commission had also held that the transaction of receiving power is separable from the obligations arising under the PPA. The petitioner is entitled to compensation under section 70 of the Contract Act for the power supplied by the developer to the licensee.

The Commission added that in the earlier case, even though ₹4.84 (~$0.059)/kWh was agreed to be paid under the PPA, the Commission, having regard to the much lesser price discovered in the year 2017 through the bidding route for the wind power projects, had directed payments at ₹2.93 (~$0.036)/kWh.

Subsequently, the wind generator agreed to the tariff of ₹2.93 (~$0.036)/kWh to be paid by the DISCOMs.

Hence, the state regulator directed the DISCOM to pay a tariff of ₹2.93 (~$0.036)/kWh for the power procured by it.

Last month, APERC set a levelized tariff of ₹2.64 (~$0.032)/kWh for the 11^th to 20^th year of operation for wind power projects in the state. The Commission added that the DISCOMs would have the first right of refusal of power purchase if the projects continue to operate after 20 years from the commercial operation date. The tariff beyond the 20th year should be mutually agreed upon by both parties and approved by the Commission.

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