Kerala Commission Directs INOX to Enter Tripartite PPA for a 16 MW Wind Project

The Kerala State Electricity Regulatory Commission (KSERC) has directed INOX Renewables Limited, the Kerala State Electricity Board Limited (KSEB), and Damodar Jagannath Malpani to enter into a tripartite power purchase agreement (PPA) for a 16 MW wind energy project.

The PPA is for the sale of electricity from the 16 MW wind energy project commissioned at the Kinfra Textile Park at Palakkad. The Commission has asked the tripartite PPA to be submitted before the Commission for approval. The Commission has also asked to register the power of attorney given by INOX to Damodar Jagannath Malpani for the project.

Background

In April 2019, Damodar Jagannath Malpani had filed a petition for the approval of the PPA to be signed with KSEB.


D J Malpani was not a party to the original petition filed by INOX for the approval of the tariff.  So, the Commission asked the original petitioner to file a separate petition for the approval of the PPA instead of filing a petition through a third party.”

The Commission further clarified that any person authorized by the petitioner INOX could sign the PPA with KSEB.

In response, INOX filed a petition before the Commission for the approval of the PPA, but INOX later reported that D J Malpani made the entire investment in the project.

KSEB presented that it had initiated the PPA with D J Malpani for the purchase of the electricity generated from the 16 MW wind power project at the tariff approved by the Commission.

The Commission noted that as per the power of attorney, the role of the D J Malpani is limited to an investor to receive payments for the energy injected from the project into the grid. Accordingly, D J Malpani is authorized to sign the PPA with KSEB.

The Commission stated that an unregistered power of attorney is legally not enforceable. In the present case, D J Malpani is claimed to be the investor, and INOX Renewables has given it the right to sign the PPA and get the payment of electricity injected into the grid. The authority granted to D J Malpani by INOX through is legally enforceable only if a power of attorney is registered as per the provisions of the Registration Act, 1908.

The Commission further noted that a tripartite power purchase agreement (PPA) should be signed between INOX, D J Malpani, and KSEB, specifying the role and responsibilities of each entity separately to avoid disputes and litigations.

The Commission also said that in the present case, the investor, D J Malpani had invested in the project in the form of equity. INOX does not have equity infusion, and so cannot claim the reimbursement of the income paid on return on equity from KSEB.

Since the tariff of the project was determined for 25 years, the Commission added that the PPA for purchasing electricity from the project would be valid for 25 years from the commercial operation date (CoD).

Recently, the KSEB gave in-principle approval to install 72 MW of wind power projects in Palakkad district by the National Hydroelectric Power Corporation (NHPC) besides 50 MW of floating solar.

A few months ago, Kerala State Electricity Regulatory Commission (KSERC) approved a tariff of ₹2.83 (~$0.04)/kWh to procure 200 MW of wind power. While the tariff of ₹2.83 (~$0.04)/kWh would be applicable from the scheduled commissioning to the commissioning of the cumulative capacity, a pooled tariff of ₹2.82 (~$0.04)/kWh will be applicable from the full commissioning to the term of the agreement. The power sale agreement (PSA) was signed between the Karnataka State Electricity Board (KSEB) and Solar Electricity Commission of India (SECI) in June 2019 and later amended on December 12, 2019.