APTEL Rules in Favor of Solar Developers, Strikes Down Reduction of Tariff

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The Appellate Tribunal for Electricity (APTEL) ruled in favor of solar developers who were successful bidders in the tender issued by the Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA) by approving the negotiated tariff of ₹7.02 (~$0.086)/kWh.

The Tribunal took the Uttar Pradesh Electricity Regulatory Commission (UPERC) to task and termed its order to further reduce the negotiated tariff for the developers as arbitrary, unjust, and unlawful.

The Tribunal said there was no reason to reduce the tariff to ₹5.07 (~$0.062)/kWh.

These developers had filed appeals with APTEL seeking parity in terms of tariff with the other successful bidders.

Background

Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA) issued a tender in 2015 to procure 215 MW of power from grid-connected solar power projects.

The 15 selected bidders had quoted a 12-year tariff in the range of ₹7.02 (~$0.086)/kWh to ₹8.60 (~$0.11)/kWh.

Adani Green Energy had quoted a capacity of 50 MW at ₹8.44 (~$0.1)/kWh, and Sahastradhara Energy was to develop a 5 MW capacity at ₹8.37 (~$0.1)/kWh tariff.

Later, the state Commission adopted a tariff of ₹7.02 (~$0.086)/kWh for nine bidders.

The two generators entered into power purchase agreements (PPAs) with the Uttar Pradesh Power Corporation (UPPCL) in December 2015 to sell power for 12 years.

However, in 2018, the state commission further reduced the tariff to ₹5.07 (~$0.062)/kWh for Adani and Sahastradhara and four others.

Adani entered into a transmission agreement with the Uttar Pradesh Power Transmission Corporation (UPPTCL) to complete the transmission line and bay within seven and five months, respectively.

But power evacuation was delayed following the delay in the construction of the transmission line due to a lack of sanctioned funds.

Adani requested UPNEDA to extend the scheduled commissioning date from June 1, 2016, to December 1, 2017.

The state Commission ruled that the bid discovered price was high, and there was a need for UPPCL and UPNEDA to engage the selected entities in negotiations over the applicable tariff.

In 2017, after negotiations with the state government, the generators gave their consent for a tariff of ₹7.02 (~$0.086)/kWh.

Later, UPPCL sent a notice to Adani seeking termination of the PPA for failure to supply power to the procurers. The generator clarified the delay in the commencement of the power supply was because of the delay in the construction of the transmission lines.

Subsequently, the Commission proposed a tariff of ₹5.07 (~$0.062)/kW for the remaining six bidders, including Adani and Sahastradhara.

Tribunal’s Analysis

The Tribunal noted that the delay in the commissioning of the projects was due to a delay in the construction of the transmission lines, and it was not the fault of the generators.

It said negotiations between the parties had resulted in the tariff of ₹7.02 (~$0.086)/kWh but the state Commission’s action in examining its validity and proposing a tariff of ₹5.07 (~$0.062)/kWh was questionable.

Further, it added that there was no obligation on the generator’s part to commence supply until the evacuation system was made available.

APTEL noted that two generators were on the same footing as the nine bidders, in which the negotiated tariff of ₹7.02 (~$0.086)/kWh was adopted, and the further reduction to ₹5.07 (~$0.062)/kWh was arbitrary, unjust, and unlawful.

In April this year, APTEL ruled that Walwhan Renewable Energy was entitled to the effective tariff of ₹7.09/kWh and ₹7.01/kWh for two projects of 50 MW each from Bangalore Electricity Supply Company.

Earlier, APTEL ruled in favor of three solar developers and said that the developers were entitled to the tariff as per the second tariff order passed by the Bihar Commission and provisions of the PPAs.

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