Change in Legal Status Calls for Fresh Registration for Renewable Energy Certificates

The Central Electricity Regulatory Commission (CERC) has dismissed the plea of Weizmann Limited and Karma Energy Limited with regards to issuing renewable energy certificates (RECs).

The Commission observed that the petitioners have to inform the state agency and the central agency in case of a change in its legal status and apply afresh for accreditation and registration to continue seeking benefits under the REC mechanism.

The Commission stated that the eligible entity in the event of a change in legal status is eligible to seek issuance of RECs from the date of application for fresh accreditation, and the RECs will be issued to the new entity. Therefore, the RECs need to be issued to Karma Energy Limited from the date of application for the fresh accreditation.

The Commission also directed the National Load Despatch Centre (NLDC) to investigate the matter and prepare a report within six months from the date of this order.


Background

Weizmann Limited and Karma Energy Limited had filed a petition seeking directions to NLDC for issuance of RECs.

The petitioners were part of the same group, Weizmann Group. Karma Energy Limited was the subsidiary company of Weizmann Limited. Weizmann Limited and Karma Energy Limited were both having wind energy projects of 9 MW each in the Satara District of Maharashtra.

The Weizmann group underwent a restructuring, and the two subsidiaries merged with the holding company, Weizmann Limited.

The power business undertaking and forex business undertaking of the merged Weizmann Limited then demerged into two companies – Karma Wind Power Limited and Chanakya Holdings Limited. The demerger came into effect from April 01, 2010.

After the demerger, the names of the resultant companies were changed to Karma Energy Limited and Weizmann Forex Limited. Post the demerger, all the assets and liabilities of the power business undertaking from the Weizmann Limited were transferred to Karma Energy Limited.

On July 25, 2017, Weizmann Limited initiated the name change formalities in favor of Karma Energy Limited in the records of various state electricity boards, including the Maharashtra State Electricity Distribution Company Limited (MSEDCL).

After receiving the approval from MSEDCL, Weizmann Limited made its application to Maharashtra Energy Development Agency (MEDA), informing the change in the name of Weizmann Limited.  Weizmann Limited requested NLDC to record the change in name per the approval of MSEDCL and the state agency.

On June 14, 2018, NLDC informed Weizmann Limited to submit a new accreditation application since there was a change in the legal status and not merely a change in name.

The petitioners stated that with the introduction of Goods and Service Tax (GST) in 2017, the registration of companies and its branches with the respective jurisdictional state became mandatory. After that, it initiated the name change formalities in the records of various state electricity boards, including the MSEDCL.

The petitioners had submitted that the procedure for the issuance of RECs to the eligible entity by the central agency which was in existence at the time of the execution of the program had no provision regarding the procedure to be followed by the eligible entity in case of a change in its name or status.

NLDC submitted that the petition had no merit as the non-issuance of RECs for the period was solely due to the petitioner’s fault. NLDC had submitted that the change in the legal status of the petitioners had admittedly occurred as far back as in the year 2010. However, no steps were taken by the petitioners to disclose the same.

During the hearing held on November 19, 2019, the petitioners had submitted that the petition had been filed seeking direction to NLDC to issue RECs for the periods from April 2018 to June 2018 and from July 01, 2018, to July 14, 2018, to Weizmann Limited and Karma Energy Limited.

The petitioners had submitted that since the documents are in the name of Weizmann Limited, the RECs for the relevant period must be issued in its name, whereas the Karma Energy Limited is entitled to RECs from July 01, 2018, to July 14, 2018, since it applied for the registration under REC mechanism on July 01, 2018.

The Commission observed that only a generating company engaged in the generation of electricity from renewable energy sources is eligible to apply for registration and issuance of RECs. Any subsidiary, group company or custodian cannot act on behalf of the generating company to register in their name.

Accordingly, the Commission stated that Karma Energy Limited is the actual generating company at the time of applying for accreditation and registration under the REC mechanism.

Recently, CERC extended the validity of RECs, which have or are due to expire shortly. The Commission observed that the RECs that have expired or are due to expire between November 1, 2019, and March 31, 2020, will now remain valid up to March 31, 2020.

In August last year, CERC had ordered the NLDC to issue RECs for a 1.5 MW wind project. The CERC issued the order after hearing a petition filed by Eingur Wind Energy Private Limited. It had approached the Commission about the delay of 72 days in applying for the revalidation of accreditation as an eligible entity under the REC mechanism.