BESCOM's Plea To Cut Tariff for Solar Power Purchased Over Contracted Capacity Rejected

The Karnataka Electricity Regulatory Commission (KERC) dismissed the petition filed by the Bangalore Electricity Supply Company Limited (BESCOM) for the redetermination of tariff for purchase of additional power or to relieve it from the obligation to purchase additional energy beyond the contracted capacity specified in the power purchase agreement (PPA).

The Commission said that the request was contemptuous and amounted to overreaching the Commission’s earlier orders.

BESCOM had filed a petition with the Commission for the redetermination of tariff for the purchase of additional power at the rate of ₹2.36 (~$0.032)/kWh or relieve it from the obligation of purchase of additional power beyond the contracted capacity.

Background       


Walwhan Renewable Energy (formerly Welspun Solar Kannada Private Limited) entered into a PPA with BESCOM on January 14, 2015, for the sale of power from its two solar power projects of 50 MW each in the Koppal district of Karnataka. As per the PPA, the maximum energy to be purchased by the distribution company (DISCOM) was 91.980 MUs with a capacity utilization factor (CUF) limit of 21%. The solar developer generated power over and above the said CUF and injected the same into the grid and sought payment for the additional power injected into the grid.

The company filed a petition with the Commission in 2016, requesting the Commission to direct the state DISCOM to purchase additional energy at ₹6.51 (~$0.089)/kWh. The Commission partly allowed the petition and directed BESCOM to purchase the energy injected at the tariff of ₹4.11 (~$0.056)/kWh. It directed the parties to execute the supplemental PPA (SPPA) incorporating the terms regarding the purchase of additional energy injected into the grid. Later, the developer filed a complaint alleging that the DISCOM had failed to execute the SPPA and wilfully disobeyed the Commission’s order.

In its order dated May 29, 2020, the Commission directed BESCOM to make payments at the rate of ₹4.11 (~$0.056)/kWh to purchase additional electricity.

BESCOM, in its submission, said that there had been a drastic decline in tariffs of solar power in the state after the earlier order passed by the Commission. However, the developer came forward to execute SPPA after a lapse of two years. The DISCOM stated that during the intervening period, it had entered into long-term contracts with other power generators to purchase solar power at the rate of ₹ 2.85 (~$0.039)/kWh and ₹2.90 (~$0.039)/kWh. Therefore, the signing of SPPA at ₹4.11 (~$0.056)/kWh for additional energy injected was not viable.

Later, the DISCOM addressed a letter to the developer on August 19, 2020, and informed that the lowest tariff discovered by SECI was ₹2.36 (~$0.032)/kWh and called upon the developer to communicate as to whether it was willing to sell the additional power at ₹2.36 (~$0.032)/kWh. However, the developer replied in negative to the proposal of BESCOM.

Commission’s Analysis

The Commission stated that the earlier orders passed by the Commission remained unchallenged. Instead of complying with the Commission’s directions, BESCOM filed the petition for redetermination of the tariff at ₹2.36 (~$0.032)/kWh for the additional energy injected by the generator.

The state regulator said that it was clear that BESCOM failed to produce any material regarding the discovery of new evidence. Therefore, the petition filed for the redetermination of the tariff for purchase of additional energy and, in the alternative relieving it from the obligations to purchase additional energy was not maintainable.

Further, the Commission noted that the state DISCOM was barred from seeking either redetermination of the tariff or relieving it from its obligation to purchase additional energy beyond the contracted capacity specified in the PPA.

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