APTEL Rules in Favor of Solar Developer, Dismisses Tariff Reduction by KERC

Appellate Tribunal for Electricity (APTEL) has ruled that Walwhan Renewable Energy (formerly Welspun Renewable Energy) is 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 (BESCOM).

APTEL noted that once BESCOM has accorded in-principle approval or recommended the special purpose vehicle (SPV) – Welspun Solar Kannada’s proposal for the extension of the scheduled date of commissioning (SCOD) after diligently examining it under the contractual terms and conditions of the power purchase agreements (PPAs), Karnataka Electricity Regulatory Commission (KERC) is bound to accept the same.

Background

Karnataka Renewable Energy Development Limited (KREDL) awarded Walwhan Renewable Energy two solar projects of 50 MW each at Kushtagi Taluk, Koppal District. Pursuant to Walwhan’s intimation, KREDL accepted Welspun Solar Kannada as the SPV to commission the projects. Following this, Welspun entered into separate PPAs with KREDL. The effective tariff for the two projects was set at ₹7.09/kWh and ₹7.01/kWh.


During commissioning, Welspun faced certain difficulties resulting in a delay in the commissioning of the projects. The company had conveyed to BESCOM that the cause of the delay was due to certain force majeure events and, therefore, was entitled to a deadline extension.

KERC had rejected the prayers of Welspun Solar Kannada and reduced the tariff as agreed in the PPAs due to a delay in the commissioning schedule.

Commission’s analysis

APTEL noted that once the procurer grants an extension as proposed by the developer under the terms of the PPA, APTEL is bound to accept it. Further, the effective date under the PPA is the date on which KERC approves it.

Regarding the force majeure claim, APTEL observed that there could not be any disputes as force majeure events referred to by Welspun were agreed upon by BESCOM, the contracting party in the PPA.

APTEL noted that BESCOM approved the extension on account of force majeure events. BESCOM had recommended the developer’s proposal to extend the scheduled commissioning date after examining it under the contractual terms and conditions of the PPA. So, the Commission was bound to accept the same without penalty to the solar developer.

As a result, APTEL restored the originally approved tariffs to ₹7.09/kWh and ₹7.01/kWh. The appellate body also directed BESCOM to refund the amounts withheld or not paid, if any, in accordance with the decided tariff. It also ruled that the solar developer was entitled to carrying cost on the amounts delayed and on the amounts withheld.

APTEL, in another decision, had ruled that three other solar developers were entitled to the tariff as per the second tariff order passed by the Bihar Commission and provisions of the PPAs.

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