Electricity Tribunal Rules in Favor of Wind Generator, Sets Aside CERC Order

The Appellate Tribunal for Electricity (APTEL) has ruled in favor of a wind developer who sought the tribunal to set aside an order by the Central Electricity Regulatory Commission (CERC) directing it to apply again for accreditation to purchase renewable energy certificates (REC).

The Tribunal also directed the Tamil Nadu Transmission Corporation Limited (TANTRANSCO) and the National Load Despatch Center (NLDC) to issue all the RECs due to the wind developer in light of the erroneous order by the CERC.

Background:

Techno Electric & Engineering Company Limited, a wind power generator with 129.9 MW of wind projects in Tamil Nadu and Karnataka, had filed an appeal with the APTEL asking it to set aside an order by the CERC. It said that the Commission had failed to take into account its merger with Simran Wind Project Limited and has taken away its status as a renewable energy generator.


The appellant argued that even after the merger, it was still legally a renewable energy generator and was entitled to renewable energy certificates. It said that the merger only resulted in a change in name and not in the legal status of the company. It contested against the CERC’s decision to treat the merger as a change in legal status.

Techno Electric said that while the TNSLDC had allowed for the issue of 120,243 RECs to it, the NLDC did not allow it citing a change in legal status due to the merger. The petitioner approached the CERC, but the CERC ruled against it, stating that a “change in ownership” amounts to a “change in the legal status” and not just a change in name.

The Commission subsequently declared that the Techno Electric would need to submit a fresh application with the NLDC to be eligible to purchase RECs. Techno Electric sought the Tribunal to issue a stay on this order and asked it to direct the TNSLDC and the NLDC to issue the RECs that were due to it.

The appellant submitted that the order of the CERC was contradicting the settled position of law that the legal status of the transferee company (Simran) remains intact even after its merge with the holding company (Techno) into its subsidiary company (Simran, now techno). It maintained that in this case, there was no change in the legal status of the company but only a change in name since it was a merger by absorption and not a merger by which a new company was formed.

The NLDC, in its response, argued that in the eyes of the law, the old entity before the merger ceased to exist after the merger, and there is a change in the ownership of the Simran Wind Project. It argued that the appellant had failed to comply with the legal requirement and was now seeking to bypass these requirements. It said that the appellant failed to inform the state and central agencies about the change in legal status. The NLDC argued that the appeal should be dismissed.

APTEL’s Analysis and Decision:

In its analysis, the APTEL said it observed that the primary dispute involves the amalgamation of the two companies and the fact that the acquired company (Simran) has adopted the name of the acquiring company (Techno Electric). It noted that after the merger of the two companies, a third or a new company had not been created. It, therefore, declared that this could not be a change in the legal status of the company.

The Tribunal further added that the Central Commission, in its order, had concluded that the merger resulted in a change in legal status without adequate reasons to do so.

APTEL, in conclusion, stated that the CERC in its order had erroneously concluded that the appellant had undergone a change in legal status and directed it to start the registration process for obtaining RECs afresh. It added that as a result of this, the order was liable to be set aside.

In its final order, the APTEL allowed the appeal of Techno Electric, stating that it had its merits. Consequently, it set aside the CERC’s order directing the appellant to apply for REC eligibility afresh. It also directed TANTRASCO and the NLDC to issue any remaining RECs due to Techno Electric within four weeks from the date of the present order.

Recently, the APTEL passed an order asking the NLDC to revoke and cancel erroneously issued renewable energy certificates to the Andhra Pradesh Southern Power Distribution Company Limited.

In March, the APTEL allowed an appeal by Azure Sunrise Private Limited (ASPL) and set aside an order passed by the Karnataka Electricity Regulatory Commission, reducing the approved timeline extension for the commercial operation date of a 50 MW solar project in the state.