The Tamil Nadu Electricity Regulatory Commission (TNERC), in a recent order, directed the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to pay 1% interest per month for delayed payment to three wind generators for the energy supplied.

The Commission directed the distribution company (DISCOM) to verify the claims made by the petitioners and make the payments towards interest within one month from the receipt of the order.

Natesan Synchrocones, Tamil Nadu Gears and Shaft Corporation, and Natesan Precision Components had filed petitions requesting the Commission to direct TANGEDCO to pay ₹4.036 million (~$54,748), ₹570,585 (~$7,740), and ₹158,337(~$2,147), respectively, as interest against delayed payments made by TANGEDCO for the power supplied.

Background

The petition was by three generators – Natesan Synchrocones (7.43 MW), Tamil Nadu Gears and Shaft Corporation (0.5 MW), and Natesan Precision components (2.01 MW).

The petitioners submitted that they had entered into wind energy purchase agreements (EPAs) with TANGEDCO. They have been facing delays in payments by TANGEDCO since December 2017. They had also not been paid interest on delayed payments.

The generators added that the DISCOM would delay payments and then force the generators to give them rebates against invoices and seek a waiver of interest.

The petitioners argued that all generators covered by the 2009 tariff order were entitled to claim interest at 1% per month against pending amounts beyond 30 days from the receipt of the bill.

The petitioners claimed that they had raised invoices for power supplied every month as per the terms of the EPA. However, TANGEDCO had failed to pay the amounts within the agreed timelines, thereby incurring interest liability on the delayed payments.

TANGEDCO, in its reply, said that due to the shortage of power in Tamil Nadu, TANGEDCO had to purchase power at higher rates from other sources. This had landed it in a financial crisis, so it could not make the payments in time.

The DISCOM’s monthly revenue from the sale of power was ₹32 billion (~$435.55 million), and tariff subsidy from the state government is around ₹6 billion (~$81.7 million). At the same time, the total outflow (expenditure) was around ₹51.5 billion (~$698.6 million). So, the shortfall was about ₹13.6 billion (~$184.48 million). Some payments were cleared when it received loans from financial institutions.

Commission’s analysis

The Commission observed that except for stating that the payment could not be made due to financial constraints, TANGEDCO had not cited any valid reason for the delay in payment.

Considering all the facts, the Commission asked TANGEDCO to pay 1% interest per month for delayed payment beyond the stipulated period as per the tariff orders.

The state regulator directed TANGEDCO to verify the claims made by the petitioners and make payment within one month from the receipt of this order, deducting payments if already made.

In April this year, TNERC directed TANGEDCO to pay ₹132.8 million (~$1.76 million) in dues, including interest at 12% per annum, to a wind developer within 30 days from the issuance of the order.

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