Solar Developer and Haryana Power Purchase Centre Spar Over Applicable Generic Tariff

Siwana Solar Power Projects Private Limited, which has a 5 MW solar project installed at Mithi village in Bhiwani district, recently filed a petition before the Haryana Electricity Regulatory Commission (HERC) against Haryana Power Purchase Centre (HPPC) for paying reduced generic tariff for the power generated from its project.

The power purchase agreement (PPA) was signed between Siwana Solar Power and the HPPC on February 21, 2014, after an inordinate delay by HPPC for which the developer had already petitioned the commission before. This delay left hardly any time for the completion of the project by the scheduled date of March 31, 2014.

The commission had clarified that if the developer fails to supply power by the scheduled date, the tariff to be determined by the commission for FY 2014-15 onwards will apply. Further, in case the project developer fails to generate and supply power before June 30, 2014, the PPA will lapse.

However, the PPA signed between the two parties had many peculiar clauses which were in violation of the PPA approved by the commission, noted the HERC. For instance:

a) Generic tariff decided by HERC of ₹7.94 (~$0.113)/kWh for FY 2013-14 in case the project is commissioned before March 31, 2014, or ₹7.58 (~$0.10)/kWh for FY 2014-15 in case it is commissioned by June 30, 2014.

b) The lowest tariff quoted and accepted in the first long term tender for the purchase of solar power through competitive bidding to be floated by HPPC until December 31, 2015

c) The lowest tariff quoted and accepted in the first long term tender for the purchase of solar power through reverse bidding to be floated by HAREDA until December 31, 2015

Besides these, no provision was made for various important aspects like payment security, deemed generation benefit, exemption from transmission/wheeling charges.

Due to various difficulties in the execution of the project, the developer again petitioned the commission for the determination of generic tariff and to allow an extension of six months for the completion of the project. Agreeing to the petition, the HERC allowed the project to be commissioned by December 31, 2014. As the project was likely to be commissioned in FY 2014-15, the tariff determined by the commission for such projects for FY 2014-15 will be the applicable tariff, the commission clarified.

Later, the generic tariff for renewable projects to be commissioned during FY 2014-15 was determined by the commission and the first year tariff for solar PV (Crystalline) projects was set at ₹9.93 (~$0.14)/kWh with a levelized tariff over the life of the project as ₹7.45 (~$0.10)/kWh.

However, Siwana Solar alleged that HPPC had made illegal deductions and paid the bills at a much lower tariff rate of ₹6.44 (~$0.09)/kWh. In spite of repeated requests made by the petitioner, the HPPC did not comply with the directions by the commission and continued to pay the same levelized tariff. Due to this, the developer had to suffer severe financial hardship, and due to lack of adequate cash flow from the project, it was not able to discharge its loan repayment liability to the bankers.

The petitioner had approached the commission and asked it to initiate action under Section 142 of the Electricity Act, 2003 against the respondent for the non-implementation of the directions given by the commission, to direct HPPC to pay for the energy injected at the tariff rates approved by the commission, and to allow the payment of interest on the amount wrongfully withheld by HPPC.

After listening to both parties and their arguments, the commission observed that since the project was delayed and not commissioned by June 30, 2014, the commission had allowed the time up to December 31, 2014, and directed that the generic tariff should be substituted by the tariff determined by the commission for such projects for the FY 2014-15 in its RE tariff order.

The tariff of ₹6.44 ($0.09)/kWh was upheld on the basis of the fact that HPPC had floated the tender to purchase 50 MW of solar power in April 2014 and had signed the PPA with four developers on June 25, 2015 for 23 MW capacity at the lowest discovered tariff of ₹6.44 ($0.09)/kWh.

However, the lowest tariff discovered by HPPC through its bidding process in April 2014, had been allowed by the commission at ₹5.68 (0.08)/kWh, on the directions of the Appellate Tribunal for Electricity in an order passed in January 2019. However, it was directed that the tariff would be subject to the impending orders of the Supreme Court Civil Appeals preferred by solar developers against the judgment passed by the Appellate Tribunal for Electricity.

The commission noted that as the petitioner had also filed an appeal against an earlier order of the commission before the Appellate Tribunal for Electricity, until the decision of that appeal pending before the higher authority, the commission is not open for the petitioner to reagitate over the decision taken in the order dated January 20, 2016, and seek levelized tariff that was determined by the commission back in 2014.

In its order, the HERC observed that HPPC was within its rights to settle the energy bills generated by the petitioner at ₹6.44 ($0.09)/kWh. The only deviation taken by the HPPC is regarding the non-determination of year to year tariff corresponding to the levelized tariff, as directed by the commission.

HPPC had argued that the tariff was discovered through bidding and it was not possible to work back a year to year tariff. The commission considered this, and it suggested that in case of difficulty in the implementation of the order of the commission, the appropriate remedy available with HPPC was to seek review from the commission.

However, the HERC underlined that the discovered tariff of ₹6.44 ($0.09)/kWh has been replaced by ₹5.68 ($ 0.08)/kWh by the CERC. Therefore, as an interim arrangement, this year to year tariff will be payable for now, the HERC order concluded.

A few months ago, the HERC issued an order approving the power purchase agreements of solar projects totaling 23 MW. The commission was examining a common petition filed by Haryana Power Purchase Centre for the approval of a draft PPA it had signed with four solar project developers and a referral by the Appellate Tribunal for Electricity (APTEL).

Recently, the HERC issued an order approving the deviations in the terms of PPA for the procurement of power by HPPC from a 10 MW solar PV project developed by Haryana Power Generation Corporation (HPGCL).