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

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					</table>The Central Electricity Regulatory Commission (<a href="https://www.cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) relaxed rules, allowing ACME Solar (<a href="https://www.acme.in/" target="_blank" rel="noopener">ACME</a>) to switch the connectivity of its 300 MW solar power project to the land route, considering their substantial progress and commitment to the project.
The Commission also noted that failure to achieve financial closure or compliance with the order would revoke connectivity if the 10% equity release is not attained.
Background
ACME Solar Holdings (ASHPL) and ACME Sikar Solar (ASSPL) submitted a petition under Section 79 of the Electricity Act, 2003. Central Transmission Utility of India (CTUIL) was the respondent in the case.
The petitioners made the following requests:
<ul>
<li>They sought permission to utilize the connectivity granted by CTUIL for their other project by exercising authority under regulations 41 and 42 of the GNA Regulations 2022.</li>
<li>They also request an interim injunction against CTUIL from revoking the connectivity granted to them on May 10, 2022, based on the letter of award issued by Maharashtra State Electricity Distribution Company (<a href="https://www.cercind.gov.in/" target="_blank" rel="noopener">MSEDCL</a>) on December 14, 2021, throughout the ongoing petition.</li>
</ul>
On May 6, 2021, MSEDCL initiated a tender for procuring power from solar power projects through competitive bidding.
On July 30, 2021, ACME Solar applied to CTUIL for Stage I Connectivity for its 300 MW project in Bikaner, Rajasthan, to 400/220 kV Bikaner 2 of CTUIL/PGCIL as per the CERC connectivity Regulations 2009.
On September 10, 2021, CTUIL granted Stage I connectivity to ACME Solar for its 300 MW project at Bikaner II pooling station.
On December 14, 2021, ACME Solar received a letter of award from MSEDCL for a 300 MW capacity project with a tariff of ₹2.42 (~$0.029)/kWh for 25 years from the commercial operation date (CoD).
ASHPL established a special purpose vehicle (SPV), ASSPL, to set up the project and sign a power purchase agreement (PPA) with MSEDCL.
On February 1, 2022, ASHPL applied to CTUIL for Stage II Connectivity for its 300 MW project in Bikaner, Rajasthan, with a proposed connectivity start date of September 30, 2023.
On March 11, 2022, the Maharashtra Electricity Regulatory Commission (MERC) approved the procurement of 500 MW of power by MSEDCL and adopted a tariff of ₹2.42 (~$0.029)/kWh through competitive bidding.
On March 21, 2022, ASHPL requested MSETCL to issue a No Objection Certificate (NOC) for its 300 MW project to enable ASHPL to seek long-term access (LTA) from CTUIL.
On March 28, 2022, ASHPL applied to CTUIL for LTA for its 300 MW project with a proposed LTA start date of September 30, 2023.
On April 28, 2022, during the &#8220;6th Consultation Meeting for Evolving Transmission Schemes in Northern Region,&#8221; CTUIL considered the proposal for granting LTA of 300 MW to ASHPL with a start date of September 30, 2023, noting that NOC from STU (MSETCL) had not been granted.
On May 10, 2022, CTUIL granted Stage II connectivity to ASHPL for 300 MW capacity from Bikaner II, with a proposed start date of September 30, 2023.
On May 26, 2022, a transmission agreement for connectivity was signed between CTUIL and ASHPL.
On June 15, 2022, CTUIL granted LTA to ASHPL for the project, subject to the condition that if the NOC from STU is not available or effective by the LTA start date (March 31, 2024), transmission charges would be billed to ASHPL until NOC is available and effective.
On June 27, 2022, the LTA agreement was signed between CTUIL and ASHPL.
On July 4, 2022, ASHPL wrote to MSETCL regarding additional documents for NOC submission for finalizing the LTA application in CTUIL for its 300 MW Project.
On July 12, 2022, MSETCL issued a conditional NOC for LTA for ASHPL&#8217;s 300 MW project due to ongoing network strengthening projects.
On July 12, 2022, CTUIL issued an amendment to the Stage II connectivity, specifying the ISTS substation and bay.
On August 2, 2022, MSETCL reiterated the unavailability of unconditional NOC due to ongoing network strengthening projects.
On August 10, 2022, ASSPL issued a Force Majeure Notice to MSEDCL due to uncertainty in power evacuation caused by MSETCL&#8217;s conditional NOC.
On August 12, 2022, MSETCL reiterated the unavailability of unconditional NOC due to ongoing network strengthening projects.
On August 31, 2022, CTUIL revised the connectivity start date to November 25, 2023, and on December 26, 2022, CTUIL amended the LTA start date to May 15, 2024.
The 180-day period from the Force Majeure notice lapsed on January 29, 2023, leading ASHPL to terminate the PPA with MSEDCL.
On February 21, 2023, ASHPL issued a termination notice to MSEDCL but received no response.
On May 3, 2023, ASHPL submitted a format transition undertaking to CTUIL for LTA conversion under the GNA regulations 2022.
The petitioners said the inability to utilize the existing connectivity dated May 10, 2022, is due to Force Majeure events beyond the Petitioners&#8217; control and for reasons not attributable to them.
Allowing CTUIL to revoke the connectivity granted to ASHPL would penalize the petitioners for events beyond their control and for reasons not attributable to them. Regulation 24.6(c) stipulates that connectivity granted to a renewable energy generating station will be revoked if the LoA or PPA, based on which connectivity was granted, is terminated before the COD of the Project.
Given the unique circumstances of the present case, the petitioners prayed that the Commission should exercise its power to relax (Regulation 41) and power to remove difficulties (Regulation 42) under the GNA Regulations 2022 and allow the utilization of connectivity granted under the LoA route on May 10, 2022, to the petitioners for the development of other projects.
Commission Analysis
The Commission notes that the issue is whether the petitioner is entitled to retain the connectivity granted at the Bikaner II Substation. The petitioner asserts their commitment to utilizing the connectivity, citing significant progress such as land acquisition, financial closure approval, and EPC contracts.
However, CTUIL contends that the petitioner&#8217;s requests fall outside the current regulatory framework, highlighting the absence of provisions for transferring connectivity between projects under different routes.
The petitioner was initially granted connectivity for a 300 MW project at the Bikaner II Substation based on a LoA issued by MSEDCL, which has since been terminated.
While regulations allow for conversion of connectivity from the land route to the LoA/PPA route, there are no provisions for converting connectivity granted under the LoA/PPA route to any other route.
Regulation 24.2 of the GNA Regulations states that connectivity granted based on the LoA or PPA shall be revoked if the LoA or PPA is terminated.
Considering MERC&#8217;s Order permitting the termination of the PPA due to a Force Majeure event, the termination of the PPA is not the petitioner&#8217;s fault. Additionally, the petitioner has made progress in project implementation.
The petitioner has made significant progress in implementing the project, including land acquisition and equipment procurement, with a target commissioning date of September 1, 2024.
While regulations don&#8217;t allow for conversion of connectivity from the LoA route to another, the petitioner&#8217;s earnest efforts and progress warrant consideration.
In light of this, the Commission exercised its power under Regulations 41 and 42 of the GNA Regulations to relax provisions and allow conversion to the Land route, subject to the following conditions:
<ol>
<li>Within four weeks, the petitioner must submit land documents for full 300 MW connectivity. Failure will result in connectivity revocation.</li>
<li>The project must be commissioned within six months from this order, considering elapsed time and progress. Financial closure and 10% equity release must be achieved within three months; failure results in connectivity revocation.</li>
<li>Relaxed timelines don&#8217;t affect liabilities under the sharing regulation 2020; project implementation must adhere to specified timeframes.</li>
<li>Treatment of submitted Bank Guarantees follows GNA Regulations.</li>
</ol>
Recently, CERC <a href="https://www.cercind.gov.in/" target="_blank" rel="noopener">issued</a> draft regulations to determine fees and charges to be collected by regional load despatch centers (RLDCs) from generating companies, distribution companies (DISCOMs), bulk consumers, inter-state transmission licensees, buyers, sellers, and inter-state trading licensees, settlement nodal agency, and any other users.
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CERC Grants Connectivity for 300 MW Solar Project Citing Force Majeure Events

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