Solar Developers Caught Between Time Extension and Safeguard Duty Reimbursement Pleas

Tata Power Renewable Energy Limited (TPREL) had filed petitions with the Uttar Pradesh Electricity Regulatory Commission (UPERC) on extending the validity of safeguard duty as a ‘Change in Law’ event. The Commission, in reply to the developer’s appeals, has stated that before declaring the notification of extension of safeguard duty in the order dated July 29, 2020, as a ‘Change in Law’ event, its impact on the project cost after completion must be ascertained.

The Commission further added that the matter would be kept in abeyance until the extension of the scheduled commercial operation date of the project being developed by TPREL is decided by the Commission. It asked TPREL to serve copies of the petition to the respondents, including the Uttar Pradesh Power Corporation Limited (UPPCL), the Noida Power company, and the Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), and allow them six weeks to file their replies.

TPREL had filed separate petitions requesting the Commission to declare the extension of the validity of safeguard duty as a ‘Change in Law’ event to be eligible to recover the additional cost incurred, if any, as per terms of Article 12 of the power purchase agreement (PPA).

TPREL was declared the winner in UPNEDA’s auction for 550 MW of grid-connected solar projects. It had quoted for 100 MW of the projects. TPREL signed the PPA on February 12, 2019.

The developer, in its submission, said that the scheduled commercial operation date of the project was November 12, 2020. However, as per the Ministry of New and Renewable Energy’s notification, the project was eligible for five month’s extension due to the Covid-19-related lockdown last year. TPREL said that it would be filing a separate petition for the approval of the extension of the scheduled commercial operation date of the project.

UPPCL and UPNEDA said that they had not received the copy of the petition filed by TPREL and requested a six-week timeline to file their replies.

The Commission agreed to grant them the time and asked TPREL to file the rejoinder in two weeks after that.

In a similar case, the Maharashtra Electricity Regulatory Commission (MERC), in a recent order, dismissed the petition of ACME Heergarh Powertech, seeking compensation to offset the alleged financial impact that imposing safeguard duty led to as premature. MERC noted that the scheduled commissioning date of the project might go beyond the last date of the applicability of safeguard duty extension notification, i.e., July 29, 2021, because of the blanket extension of five months granted by the Ministry of New and Renewable Energy in the wake of the Covid-19 pandemic.

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