APTEL Sets Aside CERC Order, Grants Extension to a 50 MW Wind Project

The Appellate Tribunal for Electricity (APTEL), in a recent order, condoned the delay of 132 days in the commissioning of a 50 MW wind project and said that the scheduled commercial operation date would be extended accordingly from the date of the order.

The Tribunal set aside the termination of the power purchase agreement (PPA) and the invocation of the bank guarantee. It directed the Solar Energy Corporation of India (SECI) to refund the encashed amount to the developer.

Wind Four Renergy had filed an application with APTEL challenging the Central Electricity Regulatory Commission’s (CERC) order approving the extension of 132 days in the commissioning of the project, subject to the condition of encashment of the bank guarantee and a reduction in tariff.

Background


In 2016, SECI floated a tender to set up 1,000 MW of ISTS-connected wind projects.

The letter of award was issued to Inox Wind Infrastructure Services (the applicant’s parent company) to set up a 50 MW wind project in the Kutch region of Gujarat, and the PPA was executed on July 21, 2017.

As per the PPA, the developer was to supply wind power to the Power Trading Company (PTC) at ₹3.46 (~$0.046)/kWh

The scheduled commercial operation date of the project was October 4, 2018, which could not be met.

Subsequently, the developer made several requests to extend the commissioning date on the grounds of non-completion of the transmission network by the Power Grid Corporation of India Limited (PGCIL).

Later, MNRE issued a notification regarding the constitution of a committee to examine the causes for the delay in setting up wind projects under Tranche I-V.

In the wake of  CERC’s order, PTC terminated the PPA, citing failure on the developer’s part to commission the project on time.

SECI, in its submission, said that as the project was not commissioned on time, the PPA was rightly terminated. SECI justified the CERC’s decision stating that the scheduled commercial operation date for the project worked out to be July 23, 2020, by the addition of the 132 days beyond June 13, 2019, and adding the nine months allowed by MNRE.

Tribunal’s analysis

The Tribunal observed that the approach of SECI was highly unreasonable, rigid, and inflexible. CERC, in its order, had clarified that the developer was not responsible for some of the delay and was entitled to an extension of 132 days.

APTEL noted that the denial by CERC to grant extension from the date of the order was unjust and unfair as the developer could not have anticipated the decision of the extension of the scheduled commercial operation date from a retrospective date and acted in the meanwhile.

The Tribunal added that even after the extension of 132 days granted by CERC, the scheduled commercial operation date came to an end during the pendency of the petition, which was unfair.

It strongly disapproved of the unreasonable denial of relief by CERC and the approach of SECI in the matter.

Considering all the facts, APTEL condoned the delay of 132 days and set aside the earlier order passed by CERC. It also directed SECI to refund the amount equal to the encashed bank guarantee to the developer.

Last May, CERC, responding to ReNew Power’s petition, had directed PGCIL not to encash bank guarantees submitted towards its wind projects until further orders.

Earlier, MNRE had issued clarifications regarding the dispute resolution mechanism to address the unforeseen disputes between solar and wind developers and SECI, NTPC, and NHPC.

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