The Appellate Tribunal for Electricity (APTEL) has dismissed a petition filed by the Siddhayu Ayurvedic Research Foundation (SARFPL) seeking to relax the banking regulations under the Distribution Open Access (DOA) Regulations due to the impact of the COVID-19 pandemic.

It ruled that any relaxation of regulations would go against the legal framework and set an undesirable precedent.

Background

SARFPL operates multiple wind farms in Maharashtra with a total capacity of 12.85 MW. It had entered into an open-access agreement to supply electricity to Mahindra CIE Automotive for April 2020. However, the consumer could not utilize the power due to the nationwide lockdown imposed on March 24, 2020. This resulted in SARFPL banking a significant amount of electricity with the Maharashtra State Electricity Distribution Company (MSEDCL).

SARFPL later sought to shift its open-access consumer for May and June 2020 to mitigate further losses. When its original consumer resumed operations in July 2020, SARFPL requested that the energy banked in April 2020 be adjusted against its July 2020 bills. MERC rejected this request, citing that SARFPL had voluntarily assumed commercial risk by continuing under open access despite the uncertainties caused by the pandemic.

In its appeal, SARFPL argued that the COVID-19 pandemic was an unforeseen force majeure event that warranted the relaxation of the 10% cap on banked energy per the DOA Regulations. It contended that MERC had previously granted relief to MSEDCL for renewable purchase obligation compliance due to COVID-19 but denied similar relief to renewable energy generators. SARFPL also asserted that the refusal to allow banked energy adjustment unfairly penalized small-scale renewable energy generators, contradicting Section 86(1)(e) of the Electricity Act, 2003, which promotes renewable energy.

MSEDCL countered that the impact of COVID-19 affected all stakeholders, including itself, with reduced revenues and fixed-cost liabilities. It argued that SARFPL knowingly continued under open access despite the lockdown, making a commercial decision that entailed risk. MSEDCL maintained that regulations limit banking to 10% of the total generated energy per month, with no provision for exceptions under force majeure conditions. It further contended that granting the appeal would disrupt regulatory consistency and create an inequitable precedent.

Tribunal’s Analysis

The Tribunal ruled that while the pandemic was an unforeseen event, the DOA Regulations explicitly cap banking at 10% per month. The wind tariff order dated November 24, 2003, allows distribution companies to purchase surplus energy beyond 10% at the weighted average fuel cost, but it does not mandate banking beyond the specified limit.

Regarding regulatory compliance and discretionary powers, APTEL noted that Regulation 39 of the DOA Regulations grants MERC the power to relax provisions in exceptional cases; however, such relaxation cannot contradict the core regulatory framework. It cited Supreme Court precedents stating that discretionary powers should not be exercised arbitrarily.

The Tribunal observed that SARFPL could sell its electricity on MSEDCL’s online portal but chose not to, indicating that it had alternative recourses. It concluded that SARFPL’s decision to continue under open access in April 2020 was a commercial choice and not a situation warranting regulatory relaxation.

The Tribunal emphasized that allowing SARFPL’s request would lead to unequal treatment among stakeholders and undermine the predictability of the regulatory framework. It reiterated that the burden of commercial risk should not be shifted to MSEDCL and ultimately onto consumers.

In August last year, the Ministry of Power clarified that energy obtained through open access arrangements, either through a third-party supplier or captive generation, will not constitute a part of the permissible capacity of banked energy.

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