The Andhra Pradesh Electricity Regulatory Commission (APERC) has dismissed a petition filed by Sarda Metals & Alloys seeking postponement of its Renewable Power Purchase Obligation (RPPO) and capping of RPPO rates.

Background

Sarda Metals, which operates an 80 MW captive power plant in Vizianagaram, had sought to carry forward its RPPO for FY 2017-18-FY 2022-23 to FY 2024-25-FY 2029-30.

The company cited financial distress and operational challenges as reasons for non-compliance with RPPO requirements.

APERC established RPPO for certain categories of consumers, including those owning captive generating plants with an installed capacity of 1 MW or above.

Sarda Metals has supplied power through open access to DISCOMs and other consumers since February 15, 2013.

As an “obligated entity” under the RPPO regulations, Sarda Metals was to fulfill its renewable energy purchase obligations by buying renewable energy or renewable energy certificates (RECs).

However, the company failed to meet these obligations for several years, citing financial distress and operational challenges.

APERC initiated proceedings against Sarda Metals for non-compliance, issuing show cause notices on December 27, 2021, for FY 2017-18 and FY 2018-19, and on October 4, 2023, for FY 2019-20.

The Commission had previously determined the company’s liability at ₹165 million (~$1.9 million) for FY 2017-18 and FY 2018-19 on May 30, 2023.

In response to these actions, Sarda Metals filed a petition seeking to postpone its RPPO obligations and requesting a cap on RPPO rates.

Commission’s Analysis

The Commission rejected the plea, stating the petitioner’s conduct was lethargic.

It noted that Sarda Metals had failed to approach it, seeking postponement either during or immediately after the relevant financial years.

Emphasizing the environmental importance of RPPO, APERC stated that unless the RPPO for each year is scrupulously followed, the objective of reducing fossil fuel consumption would be rendered ineffective. The damage in such cases could become irreversible.

The Commission also dismissed Sarda Metals’ plea to cap RPPO rates as per the Ministry of Power’s clarificatory orders.

Citing recent Supreme Court judgments, the APERC clarified that while the National Tariff Policy is a material consideration, it does not bind the Commission’s tariff-setting powers.

Recently, APERC approved a tripartite Power Supply Agreement allowing the Andhra Pradesh Green Energy Corporation, now known as AP Rural Agriculture Power Supply Company, to draw 7 GW of solar power from the Solar Energy Corporation of India.

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