The Karnataka Electricity Regulatory Commission (KERC) has ordered the Bangalore Electricity Supply Company Limited (BESCOM) to take into account the amount of energy generated and injected into the grid by Hindustan Aeronautics Limited (HAL) from June 2, 2016, to July 11, 2016, as banked energy.

The KERC has also directed the state’s distribution company to add the same to the credit of HAL as an opening balance of banked energy from January 1, 2020.

The commission has also ordered that the total energy injected into the grid from June 2, 2016, to June 30, 2016, and from July 1, 2016, to July 11, 2016, should be calculated on a pro-rata basis depending on the total number of days in a month and the total amount of energy injected in that month.

Background

Hindustan Aeronautics Limited, state-owned aerospace and defense company, had filed a petition requesting the state commission to direct the distribution company BESCOM to permit the banking of 4,917,902 units of energy injected by it before the execution of Wheeling and Banking Agreements (WBAs). Further, HAL requested the commission to pay the interest on the outstanding amounts at the rate of 12% per annum.

Out of 45.9 MW wind capacity initially allotted to Sarjan Realities Limited, the government of Karnataka in March 2016, approved the development for 4.2 MW and 2.1 MW of wind power projects by HAL at Harapanahalli village in Davanagere district of the state.

HAL had submitted applications for the two wind projects for long term open access and execution of WBAs to the State Load Dispatch Center (SLDC).

The wind projects were commissioned on March 31, 2016. In April 2016, BESCOM issued commissioning certificates and gave its concurrence to execute the WBAs for the two wind projects.

Earlier, the Karnataka Power Transmission Corporation Limited (KPTCL) had sought the concurrence of BESCOM regarding the wheeling of energy generated from the two wind projects.

HAL had injected 4,917,902 units from the date of commissioning until the signing of the WBAs from the two wind projects.

HAL then requested BESCOM to make the payment for the injected power from the date of commissioning of the two projects. However, BESCOM told HAL that the energy injected should be treated as an infirm power per the WBAs.

Infirm power means the electricity generated before the commercial operation of a generating unit. It is the energy supplied to the grid by a generating unit during its trial operation period.

Meanwhile, HAL requested that the injected energy should be compensated at the average pooled power purchase cost determined by the commission.

HAL has further pointed out that BESCOM must make the payment for the energy injected by HAL “as the energy would have been commercially utilized by selling to third parties and earned revenue.”

HAL has claimed that the energy injected from the date of commissioning of the projects to the date of execution of WBAs should be regarded as ‘banked energy.’

Meanwhile, BESCOM and Karnataka Power Transmission Corporation Limited, have argued that the electrical energy injected into the grid cannot be stored and it would be consumed, instantaneously, and there would be no option for the respondents to either accept or reject the energy.

Earlier this year, Karnataka High Court quashed an order issued by the KERC relating to an increase in wheeling charges for open access power consumers in the state. The Karnataka High Court order brought relief to all renewable energy generators trading power through open access in Karnataka.

Consequently, the petition states that the BESCOM not paying for the energy injected by HAL is “illegal and amounts to unjust enrichment.”

In response to these arguments, the Commission has directed BESCOM to consider the energy injected to the grid from June 2, 2016, to July 11, 2016, as banked energy and credit it to HAL opening balance of banked energy as on January 1, 2020.

The Commission also ordered that the energy injected to the grid from June 2, 2016, to June 30, 2016, and from July 1, 2016, to July 11, 2016, be calculated on a pro-rata basis.

In May 2018, KERC had issued an order setting the wheeling, transmission charges to be levied on renewable energy projects in the state. The order has been in effect since April 1, 2018, and will be in effect till March 31, 2020.