The Appellate Tribunal for Electricity (APTEL), in a recent ruling, allowed the Indian Renewable Energy Development Agency (IREDA) to approach the Kerala State Electricity Regulatory Commission (KSERC) to review the tariff determination order of a delayed 50 MW solar project at Kasargod Solar Park in Kerala.

The Tribunal said that IREDA was at liberty to approach the Commission for a tariff adjustment. The Commission had earlier ruled on a claim for liquidated damages for the delay in commissioning of the project.

IREDA had filed an application with APTEL challenging the state Commission’s earlier order. The Commission had ruled that the maximum liquidated damages that IREDA may recover from the engineering, procurement, and construction (EPC) contractor was ₹134.6 million (~$1.78 million). The amount had to be deducted from the total project cost for tariff determination.

Background

IREDA entered into a tripartite agreement with SECI and KSEB to sell 50 MW of power from the project to KSEB on March 31, 2015.

Later, SECI, on behalf of IREDA, entered into a contract with EPC contractor – Jakson Engineers. IREDA developed a 50 MW solar project at Kasargod Solar Park in Kerala. The entire power generated from the project was tied up with the Kerala State Electricity Board (KSEB) under the power sale agreement (PSA) dated March 31, 2017. The Solar Energy Corporation of India (SECI) acted as the nodal agency for the project.

The project was commissioned with a total project cost of ₹3.11 billion (~$41.13 million). IREDA sought a tariff of ₹4.95 (~$0.06)/kWh. By its order dated February 06, 2019, the State Commission determined the tariff of ₹3.83 (~$0.05)/kWh.

IREDA felt aggrieved because of the denial of partial expenditure of ₹253.8 million (~$3.36 million), which it claimed to have paid to the Renewable Power Corporation of Kerala (RPCKL) in two tranches. The said expenditure was incurred as power evacuation cost.

The other issue contended by IREDA was related to the liquidated damages on account of the delay in completing the project by the EPC contractor.

IREDA argued that the Commission had erred by assuming the maximum liquidated damages of ₹134.6 million (~$1.78 million), which IREDA could recover from the EPC contractor, deducting it from the project cost.

Tribunal’s analysis

The Tribunal observed that IREDA had not taken out any proceedings before any forum for adjudication of the claim for liquidated damages at the time of the tariff determination exercise. In these circumstances, the decision taken by the Commission could be based on assumptions.

APTEL noted that IREDA had taken steps to recover the liquidated damages under the EPC contract, and it should be given the liberty to approach the Commission for the review of the order of tariff determination after the decision had been rendered for the recovery of liquidated damages in the order passed by the state Commission.

Recently, KSERC approved a reduced tariff of ₹2.44 (~$0.033)/kWh proposed by KSEB to procure 110 MW of solar power from TP Saurya, a wholly-owned subsidiary of Tata Power.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.