Karnataka Electricity Regulatory Commission (KERC) has directed Hubli Electricity Supply Company (HESCOM) to pay any amounts found due within two months, from December 2021 to August 2022, to the developer of a 17 MW solar project.

In default of payment, HESCOM will incur interest at the rate of 9% per annum on the total outstanding amount found due from the date of default until the date of full payment.

Chirasthaayee Saurya, the petitioner in this case, approached the Commission seeking a declaration of the applicability of the Late Payment Surcharge (LPS) on the differential tariff of ₹1.74 (~$0.021)/KWh.

The petitioner requested the Commission to direct HESCOM to settle the outstanding dues at ₹6.10 (~$0.073)/KWh, totaling ₹256.7 million (~$3.1 million), inclusive of the LPS of ₹108.9 million (~$1.3 million) until the filing of the petition or as may be applicable on the date of dues realization.

The developer also contested the invocation of LPS Rules, 2022, by HESCOM, citing non-compliance with the mandated provisions.

Background

The petitioner initiated a 17 MW solar power project and entered into a power purchase agreement (PPA) with HESCOM for the sale of energy. The agreed tariff was ₹6.10 (~$0.073)/KWh, contingent on the project’s commissioning on or before October 6, 2017, with a reduced generic tariff for delays.

Anticipating a delay, the petitioner filed a petition seeking condonation of delay due to force majeure events, during which an interim tariff of ₹4.36 (~$0.052)/kWh was set.

The petition was disposed of, confirming the project’s commissioning date and directing HESCOM to pay the tariff and a differential tariff within three months. HESCOM failed to pay this amount, leading to the filing of a complaint, which was dismissed due to the absence of a specific direction for LPS payment in the earlier order.

While the complaint was pending, Chirasthaayee Saurya filed the present petition, claiming outstanding dues of ₹256.7 million (~$3.1 million) from December 2021 till August 2022, including LPS for delayed payments under interim tariff and differential tariff. The petitioner challenged the applicability of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, citing a Ministry of Power clarification and the respondent’s non-compliance with communicated EMI amounts.

HESCOM contended that the differential tariff had already been paid and argued that the claim for LPS was time-barred. It also asserted that the Ministry of Power’s clarification was not applicable to orders passed after the promulgation of LPS Rules, 2022. The respondent highlighted its role as a power supplier predominantly to the subsidized agricultural sector, dependent on government subsidies, and cited financial constraints due to circumstances beyond its control.

Commission Analysis

The Commission found it challenging to ascertain claims falling within the limitation period due to the absence of specific starting dates for LPS becoming due for different months. The Commission ruled that the recovery of LPS on the differential tariff until July 9, 2019, was time-barred, exceeding the three-year limitation period from the date of granting declaratory relief.

Similarly, for the recovery of LPS on delayed payment of monthly bills subsequent to July 9, 2019, the Commission held the present petition to be barred by time for claims beyond the three-year limitation period.

However, the Commission considered the recovery of outstanding energy bills from December 2021 to August 2022 and the associated LPS to be within the limitation period, as the petition was filed on November 11, 2022.

The Commission directed HESCOM to pay any amounts found due within two months from the date of the order. In case of default, HESCOM will have to pay interest at the rate of 9% per annum on the total outstanding amount found due from the date of default until the date of full payment.

The Commission also ruled that HESCOM was not entitled to the benefit of rescheduling the dues in accordance with Rule 5(1) of LPS Rules, 2022, citing non-compliance with the mandated communication timeline.

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