Tamil Nadu DISCOM Directed to Pay ₹165 Million in Wind Dues With 12% Interest

The Tamil Nadu Electricity Regulatory Commission (TNERC), in a recent order, directed the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) to pay $164.95 million (~$2.18 million) in outstanding dues and interest at the rate of 12% per annum to a wind developer within 30 days from date of the issuance of the order.

Ratedi Wind Power filed a petition with the Commission requesting to direct TANGEDCO to pay the outstanding principal amount along with the late payment interest amounting to ₹190.67 million (~$2.52 million) as per the terms of the energy purchase agreement (EPA).

Background

In 2011-12, Ratedi Wind Power approached TANGEDCO to sell 12 MW power generated from its 15 wind projects in Tamil Nadu. TANGEDCO accepted the proposal and agreed to buy the power. TANGEDCO and the Ratedi Wind Power executed 15 separate EPAs with identical provisions.


The wind generator, in its submission, said that it had not been paid for the energy supplied since October 2017 despite there being no dispute concerning the invoices. The state distribution company (DISCOM) had failed to honor the monthly invoices raised for the wind energy supplied from October 2017. Accordingly, as of December 11, 2019, a total sum of ₹158.65 million (~$2.1 million) as the principal amount was due.

The wind generator added that TANGEDCO had delayed payment without reason. Accordingly, it was also entitled to a late payment interest amounting to ₹22.52 million (~$298,177) that was accrued on the unpaid energy bills for the period of September 1, 2017, to December 27, 2019.

Ratedi Wind Power said that it had also accrued late payment interest against the invoices raised from March 2012 to August 2017 on account of delayed payment. Out of the total late payment interest accrued, it was agreed that a payment of 50% of the late payment interest amounting to ₹9.48 million (~$125,521) would be made. However, TANGEDCO had not complied.

The state DISCOM, in its reply, said that some payments were postponed and made as and when loans were received from financial institutions. The delay in payments was due to financial constraints.

“In the current circumstances, releasing huge payments to wind generators would be a difficult one. However, efforts were being taken for releasing payments for one or two months,” the DISCOM said.

Commission’s Analysis

The Commission noted that TANGEDCO was required to pay the invoice amount within 30 days from the date of receipt of the petitioner’s monthly energy bills. In the event of any payment which was delayed beyond the due date, late payment interest at the rate of 1% per month was payable, which amounted to ₹22.52 million (~$298,177).

The state regulator observed that an amount of ₹164.95 million (~$2.18 million) against the original claim of ₹190.67 million (~$2.52 million) made by the wind generator was due to be paid by TANGEDCO.

The Commission added that TANGEDCO was liable to pay interest at 1% per month (12% per annum) for the delayed payment of invoices. “Further, the respondent in its counter has not disputed its liability to pay the outstanding dues to the petitioner. They have only pleaded financial constraints faced by them as the reason for not making the payment in time,” the Commission noted.

Considering the facts, the Commission directed TANGEDCO to verify the claim made by Ratedi Wind Power and, after deducting the amount already paid, settle the same within 30 days from the date of the order together with interest at 12% per annum.

In November last year, TNERC directed TANGEDCO to pay wind generators about ₹74.2 million (~$1 million) in delayed wind power dues along with interest at 12% per year.

Earlier, TNERC had ordered TANGEDCO to pay wind generators ₹6.69 million (~$91,586) along with interest at 1% per month towards delayed payments for the supply of wind power.

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