The Central Electricity Regulatory Commission (CERC) recently ruled that the affected parties should settle the ‘Change in Law’ claims mutually as per the terms of the power purchase agreement (PPA) and approach the Commission only to verify the compensation amount.

The Central Commission passed the order after hearing two petitions filed by the Solar Energy Corporation of India (SECI) regarding compensation on the grounds of ‘Change in Law’ due to the imposition of safeguard duty and the increase in customs duty on the import of solar inverters.

The respondents in these petitions were two subsidiaries of ReNew Power — ReNew Sun Waves and ReNew Solar Energy (Jharkhand Three).

Earlier this year, the Ministry of Finance had raised the customs duty on solar inverters from 5% to 20% to encourage domestic manufacturing.

SECI signed PPAs with ReNew Sun Waves on August 13, 2019, and ReNew Solar Energy (Jharkhand Three) on November 18, 2019.

The Commission asked all the parties to settle the claims mutually and approach only in terms of Rule 3(8) of the ‘Change in Law Rules.’

Rule 3(8) of the ‘Change in Law Rules’ states that the appropriate Commission should verify the calculation and adjust the amount of the impact in the monthly tariff or charges within 60 days from the receipt of the relevant documents.

The Commission directed SECI to approach the solar generators to settle the ‘Change in Law’ claims. The filing fee paid by SECI would be adjusted against the petitions to be filed in the future.

In a recent order, CERC directed a solar project developer and the subsidiaries to approach SECI for ‘Change in Law’ claims due to the increase in customs duty on solar inverters.

Earlier, CERC had directed SECI to compensate a solar developer for the additional cost incurred due to the imposition of the Goods and Services Tax (GST) on an annuity basis. It held that the introduction of the GST laws was a ‘Change in Law’ event as per the PPA.

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