The Kerala State Electricity Regulatory Commission (KSERC), in a recent order, approved the power purchase agreement (PPA) signed between the Kerala State Electricity Board (KSEB) and Tata Power Company for procuring 110 MW of solar power at the rate of ₹2.97 (~$0.041)/kWh.

The Commission also granted permission to KSEB to sign a PPA with TP Saurya, a wholly-owned subsidiary of Tata Power Company, and directed KSEB to submit a copy of the PPA with the Commission.

Earlier, KSEB had filed a petition for the approval of the PPAs signed with NTPC and Tata Power Company for procuring 90 MW of solar power from NTPC and 110 MW from Tata Power Company at the adopted tariff of ₹2.97 (~$0.041)/kWh and grant permission to sign the PPA with TP Saurya.

Background

KSEB had floated the tender to procure 200 MW of solar power in September 2020. NTPC and Tata Power were declared the successful bidders in the reverse auction. NTPC was awarded 90 MW at ₹2.97 (~$0.041)/kWh, and 100 MW was awarded to Tata Power Company.

KSEB issued the letter of award to Tata Power Company on January 6, 2021.

In its earlier order dated June 21, 2021, the Commission had approved the PPA with NTPC to procure 90 MW of solar power at ₹2.97 (~$0.041)/kWh.

KSEB, in its submission, said that Tata Power Company intended to execute the PPA through TP Saurya and had requested KSEB to seek the permission of the Commission to that end.

The Commission noted that, as per the agreement dated March 23, 2021, between Tata Power Company and TP Saurya, Tata Power Company had stated that it was completely absolved from its obligation as a bidder from the date of signing the agreement. The Commission noted that it was Tata Power Company that had participated in the bid and was declared successful. However, as per the present agreement, Tata Power Company wanted to transfer all obligations under the PPA to TP Saurya.

During the second hearing held on June 8, 2021, the Commission clarified that Tata Power Company, as the successful bidder, had agreed to supply 110 MW solar power to KSEB as per the bid. Therefore, it could not be absolved from its obligations under the PPA, which is to be signed by TP Saurya on behalf of Tata Power Company. The Commission asked Tata Power Company to make amendments to the agreement with TP Saurya.

Later Tata Power Company submitted the amended agreement with a new clause, which stated, “In case of any default or breach on the part of TP Saurya, and failure on the part of TP Saurya to remedy such breach or default even after due notice of the same, then Tata Power Company would discharge the obligations of TP Saurya to the satisfaction of KSEB to the extent and as envisaged under the PPA.”

Commission’s analysis

After considering all the facts, the Commission noted that the articles, clauses, and other conditions in the PPA between KSEB and Tata Power Company were as per the model PPA approved by the Commission. Accordingly, KSERC decided to approve the initial PPA between KSEB and Tata Power Company.

KSERC further added that as per the amended agreement dated September 9, 2021, signed between Tata Power Company and TP Saurya, Tata Power Company was committed to and had agreed to discharge the obligations of TP Saurya to the satisfaction of KSEB.

Hence, the Commission decided to grant permission to KSEB to sign the PPA with TP Saurya, the 100% subsidiary company of the successful bidder Tata Power Company for supplying 110 MW solar power at ₹2.97 (~$0.041)/kWh.

The state regulator also added that the agreement dated March 23, 2021, and its amendment dated September 9, 2021, signed between Tata Power Company and its subsidiary TP Saurya should form an integral part of the PPA to be signed between KSEB and TP Saurya.

In February this year, KSEB announced its willingness to procure 300 MW of solar power from NTPC at ₹2.51 (~$0.034)/kWh. NTPC had informed the state distribution company that the projects being interstate transmission system (ISTS)-connected, the power will be eligible for the waiver of ISTS transmission charges and losses for 25 years.

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