The Appellate Tribunal for Electricity (APTEL) has allowed Andhra Pradesh distribution companies (AP DISCOMs) to deduct the Generation Based Incentive (GBI) amounts retrospectively from the wind project tariffs, starting from the date of the filing of the petition on February 14, 2017, until they were fully credited.

This decision aimed to rectify the omission of GBI consideration in the generic tariff orders dated August 1, 2015, and March 26, 2016, which violated Clause 20 of the APERC 2015 Regulations.

These regulations mandated the inclusion of all government incentives or subsidies in tariff determination. While earlier tariff orders had factored in Accelerated Depreciation (AD) benefits, the omission of GBI warranted rectification.

Background

The GBI program was introduced in 2009 by the Ministry of New and Renewable Energy (MNRE) to promote wind power generation by offering ₹0.50 (~$0.0059)/kWh fed into the grid for up to ten years. This program, later extended during the 12th Plan period in 2013, included a financial cap of ₹10 million (~$117,526)/MW. It explicitly stated that GBI was over and above the State-determined tariffs. In 2018, APERC withdrew the GBI program.

Under the 2015 APERC Regulations, a single-part levelized tariff was determined for a useful life of 25 years. Clause 20 explicitly requires the inclusion of all subsidies or incentives, including GBI, in tariff calculations. However, GBI was not considered in the generic tariff orders for 2015-16 and 2016-17, which determined a tariff of ₹4.84 (~$0.057)/kWh without AD.

In February 2017, AP DISCOMs filed a petition seeking an amendment to the earlier orders, arguing that GBI benefits must be passed on to DISCOMs. Subsequently, Green Infra Wind Solutions entered a Power Purchase Agreement (PPA) with AP DISCOMs, adopting the 2016 tariff order. Notably, the PPA’s approval was explicitly subject to the outcome of the pending petition.

Green Infra Wind Solutions contended that the tariff fixed in the PPA at ₹4.84 (~$0.057)/kWh for 25 years was binding and could not be unilaterally amended. The company argued that GBI, as per MNRE guidelines, was over and above the State-determined tariffs, and retrospective tariff revision violated the principles of promissory estoppel and legitimate expectations.

On the other hand, AP DISCOMs argued that excluding GBI from tariff calculations unfairly benefited generators availing GBI over those opting for AD, creating inequity. They emphasized that APERC had a statutory obligation under Clause 20 to ensure compliance and retained the authority to amend tariff orders under Section 64(6) to promote equitable treatment and prioritize public interest.

Tribunal’s Analysis

APTEL analyzed that the omission of GBI consideration in the earlier tariff orders contravened Clause 20 of the 2015 Regulations, necessitating rectification. The Tribunal held that allowing generators to retain GBI while AD benefits were factored into the tariff would lead to unjust enrichment and irrational classification of wind generators.

APTEL also affirmed its authority to amend tariff orders under Section 64(6) and emphasized that retrospective adjustments would support the financial stability of AP DISCOMs and safeguard consumer welfare without affecting the generators’ recovery of costs. It was noted that the PPA incorporated the tariff determined in earlier APERC orders but was explicitly subject to amendments under the regulatory framework.

The Tribunal ruled that GBI amounts availed by wind power generators must be factored into the generic tariff determined under the 2015 Regulations. It authorized the  DISCOMs to deduct GBI amounts from monthly bills from February 14, 2017, until the full amount was credited.

Consequently, the Southern Power Distribution Company of Andhra Pradesh and Eastern Power Distribution Company of Andhra Pradesh must refund the amounts representing the GBI benefit, illegally recovered from Green Infra Wind Solutions, along with simple interest at 12% per annum, at the earliest.

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