The Central Electricity Regulatory Commission (CERC) has determined a generic tariff of ₹7.87 (~$0.091)/kWh for NTPC Green Energy’s 50 MW Rajgarh solar project.

Although the petitioner, NTPC Green, argued for higher tariffs based on different commissioning phases, the Commission held that the project was commissioned in the financial year 2014-15. However, in the interest of fairness, it decided to apply the tariff for the financial year 2013-14 rather than the lower tariff for 2014-15.

Background

The project was developed following a power purchase agreement (PPA) signed on December 28, 2011, between NTPC Green, the petitioner, and Madhya Pradesh Power Management Company (MPPMCL). The key issue was whether the applicable tariff should be based on the financial year in which parts of the project were commissioned or on the financial year in which the entire project was completed.

The petitioner had sought the application of different tariffs based on the project’s phased commissioning. It argued that since 30 MW was commissioned on March 31, 2014, during the financial year 2013-14, it should be eligible for a tariff of ₹9.35 (~$0.11)/kWh, which was applicable for the financial year 2012-13.

Similarly, for the remaining 20 MW commissioned on April 30, 2014, during the financial year 2014-15, the petitioner sought a tariff of ₹7.87 (~$0.091)/kWh, applicable for the financial year 2013-14. It proposed billing the entire project at a weighted average tariff of ₹8.76 (~$0.10)/kWh.

In its 2017 order, CERC acknowledged that 60% of the project was commissioned in 2013-14 and ruled that a tariff of ₹7.87 (~$0.091)/kWh should apply to the whole project. However, MPPMCL challenged this decision before the Appellate Tribunal for Electricity (APTEL). It argued that since the project was fully commissioned only in the financial year 2014-15, the applicable tariff should be ₹6.95 (~$0.081)/kWh per the rates determined for that year. APTEL set aside CERC’s 2017 ruling, citing procedural irregularities, and directed a fresh hearing.

The petitioner based its arguments on Regulation 8(2) of CERC’s Renewable Energy Tariff Regulations (2012), which it claimed allowed for the application of the previous year’s tariff if a project was commissioned within the following year and if the PPA had been signed before the end of the tariff year. It maintained that different tariffs be applied for different parts of the project commissioned in separate years.

NTPC Green also pointed out a similar precedent in a 2017 case where CERC had applied the previous year’s tariff for another renewable energy project. Additionally, the petitioner highlighted that MPPMCL had been withholding 5% of its payments due to the ongoing tariff dispute, resulting in outstanding dues of ₹217.5 million (~$2.52 million).

The respondent, MPPMCL, argued that since the entire project was commissioned only on April 30, 2014, it should be treated as fully commissioned in the financial year 2014-15. According to the respondent, Regulation 8(2) required that the entire capacity covered under the PPA be commissioned before March 31 of the following year to be eligible for the previous year’s tariff, a condition that NTPC Green had failed to meet.

MPPMCL also pointed out that NTPC had used a common metering system for the entire project, which, in its view, invalidated its claim for different tariffs. It also contended that NTPC Green’s reliance on the Central Electricity Authority Grid Regulations, which state that each inverter module should be treated separately, was misplaced, as these regulations pertain only to grid connectivity and not tariff determination.

Commission’s Analysis

The Commission concluded that the commercial operation date should be based on the completion of the entire project, as the PPA defined the commercial operation date as the date when the full capacity was commissioned.

Additionally, the Central Electricity Authority Connectivity Regulations, which NTPC Green cited to support its argument for module-wise tariff determination, were irrelevant to tariff applicability.

The Commission clarified that tariff determination must be governed strictly by CERC’s Renewable Energy Tariff Regulations, which required the entire PPA-covered capacity to be commissioned before a certain deadline for the previous year’s tariff to apply. Since the project was fully commissioned only on April 30, 2014, the Commission agreed with MPPMCL that the financial year 2014-15 should be considered the relevant commissioning year.

However, despite agreeing that the project was completed in the financial year 2014-15, CERC ruled that the tariff of ₹7.87 (~$0.091)/kWh, which was applicable for the financial year 2013-14, should be applied instead of the ₹6.95 (~$0.081)/kWh tariff for the financial year 2014-15.

The Commission reasoned that Regulation 8 did not explicitly address cases where projects missed the March 31 deadline but were commissioned shortly thereafter. Since 60% of the project was commissioned in the financial year 2013-14, CERC deemed it unfair to apply only the financial year 2014-15 tariff.

To balance the petitioner’s and the respondent’s interests, the Commission applied the preceding year’s tariff, aligning with the spirit of Regulation 8 of the Renewable Energy Tariff Regulations.

The petitioner’s request for separate tariffs for 30 MW and 20 MW was rejected, as the entire project was metered together and treated as a single entity. The respondent’s demand for the lower tariff of ₹6.95 (~$0.081)/kWh was also denied to ensure fair compensation for the petitioner’s investment.

Finally, CERC directed MPPMCL to release the withheld ₹217.5 million (~$2.52 million) to NTPC Green, along with carrying costs, since NTPC Green had been billing at ₹7.87 (~$0.091)/kWh, which has now been officially recognized as the correct tariff.

The Commission recently approved the tariffs between ₹3.27 (~$0.037)/kWh and ₹3.32 (~$0.038)/kWh for NTPC to procure 1,500 MW of power from interstate transmission-connected wind-solar hybrid power projects.

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