The Appellate Tribunal for Electricity (APTEL) has affirmed the rights of power generators Vaayu (India) Power Corporation and Vishwind Infrastructure to terminate their power purchase agreements (PPAs) with the Southern Power Distribution Company of Andhra Pradesh (APSPDCL).

The decision comes in the wake of APSPDCL’s persistent defaults on payment obligations, which were previously identified by the Andhra Pradesh Electricity Regulatory Commission (APERC).

It also allowed the two wind energy generators to sell their power under open access arrangements.

Background

The Tribunal’s ruling was based on appeals filed by APSPDCL and other related entities against a common order issued by APERC on December 20, 2023.

The disputes originated from multiple PPAs between APSPDCL and the two wind energy generators for projects located in Kurnool district, with a total capacity of 50.4 MW for Vaayu and 7.2 MW for Vishwind.

The agreements were established with a tariff of ₹3.50 (~$0.041) per unit for the first ten years, with subsequent tariffs subject to APERC’s determination.

Since the commencement of operations, both generators supplied power and issued regular invoices.

However, as early as 2020, issues arose regarding delayed payments, prompting Vaayu to seek legal recourse from APERC. Despite some payments made by APSPDCL following interim orders from APERC, significant arrears remained.

In early 2023, both Vaayu and Vishwind issued preliminary termination notices citing continued payment defaults by APSPDCL.

Following a lack of response from APSPDCL, they formally terminated their PPAs and sought no-objection certificates to sell power through open access, leading to further petitions before APERC.

Tribunal’s Analysis

APTEL found that APSPDCL had repeatedly failed to meet its financial commitments, leading to significant arrears owed to Vaayu and Vishwind.

The Tribunal noted that these defaults constituted a breach of contract, justifying the termination actions taken by the generators.

It ruled that the generators had the right to terminate their PPAs due to APSPDCL’s failure to cure the defaults. It emphasized that subsequent payments made by APSPDCL could not retroactively rectify prior defaults.

The Tribunal confirmed that such defaults provided grounds for the generators to terminate their agreements.

APTEL mandated that APSPDCL issue  no-objection certificates to Vaayu and Vishwind, to sell their generated power through open access.

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