KERC Dismisses Petition Claiming Interest for Delayed Payment for a Biomass Project

In a recent order, Karnataka Electricity Regulatory Commission (KERC) has dismissed a petition filed by  Koppal Green Power Limited against Gulbarga Electricity Supply Company Limited (GESCOM) asking it to pay an interest of ₹4.2 million (~$60,678) towards the delayed payment of differential tariff for the power supplied.

The petitioner, Koppal Green Power, owns and operates a biomass-based generating company with an installed capacity of 6 MW.

The petitioner had entered into a Power Purchase Agreement (PPA) on March 30, 2001, with the Karnataka Power Transmission Corporation Limited (KPTCL) for the sale of energy to the state grid.

Later, the PPA was assigned to the Gulbarga DISCOM. A supplemental PPA was then signed on March 24, 2011, between Koppal Green and GESCOM at a tariff of ₹4.3524 (~$0.063)/kWh without escalation, for ten years.



With the increase in biomass fuel cost and other expenses, Koppal Green Power filed a petition before the commission requesting for a supplemental PPA to reflect the revised tariff instead of the existing tariff of ₹4.3524 (~$0.06283)/kWh. It also asked the commission to direct GESCOM to pay the amount overdue of the differential tariff.

In response to the petition, the commission directed GESCOM to execute the supplemental agreements with Koppal Green, incorporating the revised tariff. The commission ordered GESCOM to make the due payment, within two months from the date of the order.

GESCOM then paid the entire overdue amount for the period between January 1, 2015, and October 2016. Of the total, due amounting to ₹14.2 million (~$204,982) was paid on July 7, 2017, and ₹10.03 million (~$144,772) was paid on July 13, 2017.

Then,  another petition was filed claiming interest (late payment charges) for the delay in making the payment of the differential amounts.  The interest for the delayed payments was claimed as per the provisions in Article 6.3 of the PPA, which reads:

If any payment from the corporation is not paid when due, there shall be due and payable to the company penal interest at the rate of SBI Prime Lending Rate plus 2% per annum for such payment from the date such payment was due until such payment is made in full.”

In response, GESCOM duly pointed out that Koppal Green should have claimed the interest in its initial petition. Instead, it waited for the differential tariff amount overdue to be paid first and are now claiming the payment of accrued interest.

After hearing both the parties, the commission concluded that Koppal Green is not entitled to any of the reliefs it has asked for.

In December 2018, the Uttar Pradesh Electricity Regulatory Commission (UPERC) had disapproved three standardized power purchase agreements for the procurement of 32.5 MW of bagasse-based power from generators by the Uttar Pradesh Power Corporation Ltd.

Recently, the Haryana Electricity Regulatory Commission issued an order approving the power purchase agreements for 3 MW of biomass procurement by Haryana Power Purchase Center.