State DISCOM Directed to Pay Solar Developer Differential Tariff as per the PPA

The Karnataka Electricity Regulatory Commission (KERC) recently ruled that a solar developer was entitled to a tariff of ₹8.40 (~$0.113)/kWh from the Gulbarga Electricity Supply Company (GESCOM) from the date of the commissioning of the project.

The Commission directed GESCOM to pay the developer, Aurad Solar, the differential tariff for the energy supplied from the date of the commissioning of the project within three months. If the distribution company (DISCOM) failed to do so, it would have to pay an interest of 9% per annum for the default until the payment date.

It also said that the developer was not liable to pay any liquidated damages for the delay in the commissioning of the project. The damages, collected if any, should be refunded to the developer within 30 days from the order’s date.

Also, the petitioner and the DISCOM should enter into a new supplemental power purchase agreement (SPPA) within 30 days from the date of the order.


Aurad Solar had filed a petition with the Commission requesting an extension of time on the grounds of ‘force majeure’ events and approving the new SPPA. It had also requested the Commission to direct GESCOM to procure power at ₹8.40 (~$0.113)/kWh as per the provisions of the PPA.

Background

The Karnataka Renewable Energy Development Limited (KREDL) had invited bids from eligible land-owning farmers to develop solar projects in the state. Aurad Solar was selected to develop a 3 MW solar power project. The developer signed the PPA with GESCOM on September 7, 2015, and a tariff of ₹8.40 (~$0.113)/kWh was agreed for the energy delivered from the solar project.

The project was commissioned on February 28, 2017, three months later than the scheduled commissioning date of the project.

The developer, in its submission, said that the delay in achieving the commercial operation of the project was due to ‘force majeure’ events. Therefore it was not liable for any reduced tariff or payment of liquidated damages for the delay in commencement of the power supply.

Later, the developer commissioned the project on May 29, 2017, and after that, the parties executed the SPPA on March 16, 0217,  and sent it to the Commission for approval. Then, GESCOM asked the developer to approach the state regulator for timeline extension for the commissioning of the project.

GESCOM, in its submission, said that there was no need for the developer to wait for the approval of the SPPA by the state Commission to apply for conversion of land and its argument that the delay in getting the approval for land conversion being beyond its control was not justified.

The state DISCOM also said that the petitioner’s contention that the delay in the execution of the project was on account of demonetization was also not valid.

Commission’s analysis

The Commission observed that the project was ready for commissioning with the Santhpur substation. The next step for synchronization was obtaining interconnection approval and commissioning the project with the grid.

The Commission noted that there was a considerable delay in the issuance of the land conversion order, which was not the developer’s fault. Hence, the developer was not responsible for the delay in the commissioning of the project.

The state regulator noted that the delay in land conversion order alone was the cause for the delay in the commissioning of the project.

Further, the state regulator added that the developer would have been liable for liquidated damages had it not been able to establish that the project’s delay was due to ‘force majeure’ events for claiming the extension in the commissioning date of the project. Hence, the petitioner was not liable to pay any liquidated damages for the delay in the commencement of the power supply.

Also, KERC added that the PPA provided a tariff of ₹8.40 (~$0.113)/kWh for the energy supplied from the commercial operation date during the entire term of the PPA. It said that the developer was being paid the tariff of ₹4.36 (~$0.058)/kWh from the commissioning date of the project. Thus, the developer was entitled to the differential tariff.

Last July, KERC granted commissioning deadline extension to three solar projects on the grounds of ‘force majeure’ events. It also approved the tariffs as agreed in the PPAs.

Earlier, KERC had condoned the delay in commissioning two solar projects of 20 MW each. It had extended the scheduled commercial operation dates for both projects because of a ‘force majeure’ event.

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