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Daily News Wrap-Up: APTEL Criticizes MERC for Denying Petitioner Relief

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					</table>The Appellate Tribunal for Electricity (<a href="https://aptel.gov.in/" target="_blank" rel="noopener">APTEL</a>) has ordered Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to pay solar developers compensation for the excess power consumed.
The state-owned generation and distribution company had denied payment, stating that the quantity of power against which payment can be made to developers is limited to a capacity utilization factor (CUF) of 19%.
In essence, the state consumed power but didn’t pay developers because the solar projects generating power were operating at higher than mandated CUF.
Background
Solar power generators had filed petitions by themselves or through the National Solar Energy Federation of India (NSEFI) challenging the legality, validity, and enforceability of the Tamil Nadu Electricity Regulatory Commission’s (TNERC) order limiting the quantity of power against which payment is made to developers to a CUF of 19%.
TNERC had rejected the petitions, stating that higher costs on account of higher CUF are an additional financial burden on DISCOMs.
It said that the AC capacity of the solar project should correspond with the contracted AC capacity, and the scheduled power should never be over the contracted capacity.
Aggrieved by the TNERC order, the developers petitioned APTEL stating that neither the tariff orders nor the power purchase agreements (PPA) provided for restricting payment for the excess generation beyond the normative CUF of 19%.
The developers also argued TANGEDCO does not have jurisdiction to amend the PPAs unilaterally.
TANGEDCO submitted that the generic tariff was based on multiple factors, the most critical being CUF of 19%. It also said that the tariff only applied to generators conforming to the tariff order.
NSEFI argued that PPAs do not expressly provide for a contracted capacity restricted to the CUF of a project.
It argued that the PPA provides that the developer has proposed to sell solar energy generated from its project having an installed capacity of 216 MW and not based on contracted capacity, which is restricted to the CUF of a project.
Tribunal’s Analysis
APTEL rejected TANGEDCO’s normative CUF argument as the developers had not agreed to any cap on the generation beyond CUF of 19%.
On the contrary, the tariff order issued by TNERC provided for maximizing the return by using the equipment efficiently.
The Tribunal also noted that the Ministry of Power had specified that if the procurer purchased power above the maximum CUF specified, the same might be done at 75% of the PPA tariff.
Thus, the energy generated and supplied beyond CUF of 19% had to be considered for payment.
It also found that TNERC’s order limiting the payment to generators was void of any substantive provision under the relevant tariff order. The Tribunal deemed it unjust and unreasonable.
APTEL directed TANGEDCO to pay the applicable PPA tariff to the developers for power procured from solar projects running at 19% CUF.
Further, it directed the company to pay 75% of the PPA tariff for power consumed at CUF above 19%.
Recently, APTEL <a href="https://mercomindia.com/aptel-favor-solar-developers-strikes-down-reduction-tariff/" target="_blank" rel="noopener">ruled</a> that a solar developer was entitled to a tariff of ₹7.01 (~$0.085)/kWh as it commissioned its projects before the control period, which commenced on March 31, 2016.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

APTEL Orders TANGEDCO to Pay Solar Developers for Excess Power Consumed

The National Solar Energy Federation of India (<a href="https://www.nsefi.in/" target="_blank" rel="noopener">NSEFI</a>) has requested Union Law and Justice Minister Kiren Rijiju to re-examine the Punjab Renewable Energy Security, Reform, Termination, and Re-Determination of Power Tariff Bill, 2021.
The Bill, passed in the Punjab State Assembly on November 11, 2021, has been referred to the President of India for his approval by the Punjab Governor. NSFEI contends that if the President approves the Bill, it will be detrimental to the renewable energy industry.
NSFEI claims that the Bill, which will allow redetermination of the already finalized tariff of operational projects, contravenes the Electricity Act, 2003, and is against the National Electricity Policy, 2005 and the National Tariff Policy, 2016.
According to the Federation, the Bill will render the renewable energy projects unviable and burden the sector with a negative investment outlook.
In November, the Punjab Assembly <a href="https://mercomindia.com/punjab-renewable-energy-tariffs-renegotiation-bill/" target="_blank" rel="noopener">passed</a> a Bill to revise the long-term power purchase agreements (PPAs) between the Punjab State Power Corporation and renewable energy generators. The Bill seeks to reduce the tariffs for renewable energy projects approved by the state electricity regulatory commission.
NSFEI claims that the enactment of the Bill will endanger India&#8217;s goal of 500 GW of renewable energy by 2030. The group maintains that this will impact future investments in Punjab and affect investments across India due to the fear of other states following suit.
Bill transgresses the Constitution 
NSFEI also alleges that the Bill is a violation of the Constitution of India, which states that any repugnancy between a law made by the state legislature and an existing law made by the Parliament on a subject covered under the concurrent list will be void. The Bill also conflicts with the provisions of the Indian Contract Act, 1872 by depriving renewable power generators of their vested rights under concluded power purchase agreements (PPAs).
The industry association argued that tariffs discovered under the competitive bid process must not be tampered with. Any termination of PPAs or renegotiating the tariff will violate the sanctity of contracts and adversely affect the developer&#8217;s ability to repay loans, leading to the recall of loan facilities and widespread bank loan defaults.
NSEFI pointed out that the landed purchase cost of solar is ~₹6.5 (~$0.086) /kWh against the overall total power purchase cost of ₹4.3 (~$0.057) /kWh. Considering the overall energy generation from solar is only over 4% of the state&#8217;s energy mix, and the purchase cost impact being ~₹ 0.06 (~$0.00079) /kWh, the negative impact of breaching the sanctity of contracts would far outweigh any benefits.
The bad precedent set by Andhra Pradesh
This is not the first time a state government has tried to renegotiate tariffs. In 2019, Chief Minister of Andhra Pradesh YS Jaganmohan Reddy announced that the government would review the PPAs signed between the state&#8217;s DISCOMs and power generators. The decision had alarmed power producers, investors, policymakers, and legal experts. However, the Andhra High Court <a href="https://mercomindia.com/andhra-quashes-order-solar-wind-tariff/" target="_blank" rel="noopener">quashed</a> the state government&#8217;s order.
The High Court <a href="https://mercomindia.com/andhra-quashes-order-solar-wind-tariff/" target="_blank" rel="noopener">directed</a> the distribution companies (DISCOMs) to pay the monthly bills at ₹2.44 (~$0.033)/kWh for solar power and ₹2.43 (~$0.033)/kWh for wind. But the generators are still <a href="https://mercomindia.com/andhra-pradesh-high-court-directs-discoms-to-file-affidavit-on-dues-to-renewable-generators/" target="_blank" rel="noopener">filing</a> affidavits in the Court for the payments due.
According to <a href="https://mercomindia.com/product/india-solar-project-tracker/" target="_blank" rel="noopener">Mercom India Solar Project Tracker</a>, over 800 MW of large-scale solar projects are operational in Punjab, and about 440 MW tendered pending auctions. The tariffs for the projects in operation range from ₹5.62 ($0.075)/kWh to ₹8.74 ($0.12)/kWh.

Re-Examine Punjab’s Bill on Renegotiating Renewable Energy Tariffs: NSEFI

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