The Central Electricity Regulatory Commission (CERC) has ordered compensatory relief to ACME Solar from the imposition of the safeguard duty citing the ‘Change in Law’ clause. The petition was filed for ACME Solar’s project in Madhya Pradesh’s Rewa Solar Park.

The Commission has asked Madhya Pradesh Power Management Company Limited (MPPMCL) and Delhi Metro Rail Corporation (DMRC) to start paying the reconciled amount of ₹471 million (~$6.28 million).

The Commission also dismissed MPPMCL’s request for the payment of the amount from July 2020, because of the COVID-19 crisis. The Commission said that on account of the clear directive of the MNRE, the payment to renewable energy generators should be made on a regular basis as was being followed before the lockdown and directed it to release the amount immediately.

The Commission also exempted ACME Solar from filing an affidavit because of the extension of the countrywide lockdown due to the ongoing pandemic.

Case Background

ACME Jaipur Solar Power Private Limited, a special purpose vehicle of ACME Solar Holdings, had filed a petition for relief citing the ‘Change in Law’ clause.

The respondents, in this case, were MPPMCL, DMRC, and Rewa Ultra Mega Solar Limited (RUMSL).

ACME Solar had requested the Commission to declare the imposition of safeguard duty as ‘Change in Law, ’ which had led to an increase in the additional capital expenditure of the project. It had also requested the Commission to allow interest on the incremental working capital.

In March 2013, RUMSL had issued a Request for Selection (RfS) for the development of 750 MW of solar projects split into three units of 250 MW each. ACME Solar Holdings was selected as the successful bidder to develop one unit of the Rewa solar project.

In 2017, ACME Solar incorporated a special purpose vehicle, ACME Jaipur Solar Power Private Limited, for the execution of the project. Later, ACME Solar entered into two separate PPAs with MPPMCL and DMRC for the development of the project.

The safeguard duty was imposed by the government in July 2018 on the import of solar cells. The effective rate of duty then was 25%.

In its earlier order, the Commission had noted that the compensation should be paid within 60 days of the date of the order or from the date of submission of claims by the petitioners. An option was also provided to the petitioners and the respondents to mutually agree on a mechanism for the payment of such compensation.

The Commission noted that ACME Solar had submitted all the necessary documents illustrating the supply of imported goods until the commissioning certificate was issued.

The Commission reiterated that it has already held that the imposition of the safeguard duty as an event covered under ‘Change in law’ and that the actual amount of the safeguard duty imposed by the competent authority and paid by the petitioners needs to be compensated.

With respect to the previous order, ACME Solar had submitted revised supplementary invoices of ₹194.1 million (~$2.58 million) and ₹693.8 million (~$9.2 million) to be paid by DMRC and MPPMCL respectively. MPPMCL denied to pay the amount, and later an agreement was reached between the parties. According to the agreement, an amount of ₹471 million (~$6.28 million) was to be paid by MMPMCL and DMRC, out of which, MMPMCL had to pay ₹368 million (~$4.9 million), and DMRC had to pay ₹102.9 million (1.37 million).

The Commission stated that ACME Solar had requested the Commission to direct the respondents to start paying the reconciled amount of ₹471 million (~$6.28 million), as per the deferred annuity payment based on the prevailing interest rate.

The Commission noted that since the contracting parties have mutually agreed to pay the reconciled amount of ₹471 million (~$6.28 million), the payment should be expedited by both parties.

Last year as well, CERC issued an order to compensate ACME Solar by accepting that the levy of safeguard duty was a ‘Change in Law.’ ACME had filed petitions after it incurred more than the planned costs in executing the Rewa solar project and the Jodhpur solar PV project.