The Tamil Nadu Electricity Regulatory Commission (TNERC) has directed the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to pay wind generators about ₹74.2 million (~$1 million) in delayed wind power dues along with interest at 12% per year.

Background: 

The Commission received petitions from Techno Electric & Engineering Company Limited and a yarn merchant with 33 MW and 225 kW of wind power projects in the state, respectively. They sought the Commission to direct TANGEDCO to pay their dues along with interest due to the delays to the tune of ₹74.2 million (~$1 million) and court fees of ₹759,424 (~$10,241).

They said that the distribution company (DISCOM) had been consistently late in paying their dues over the last few years and even when any dues were paid, the interest on delays was not included.

The petitioners also noted that TANGEDCO did not avail their offers to settle the dues at a reduced interest rate of 6% per year, provided they make the payment within 60 days from the date of their memos.

They explained that the delays in payments had caused them “severe difficulties” and has hampered their ability to carry on their respective businesses.

Commission’s Stance: 

The Commission said that while TANGEDCO did not deny its liability for the payment of interest on the delayed amount, it failed to take up the petitioners’ offer for a reduced interest rate. So, it is now obliged to pay interest to the wind power generators as per the contract’s original terms.

However, the Commission said that any claims for interest payment would be limited to three years from the date on which the “cause of action” arose. In this case, the petitions claiming interest were filed on June 16, 2014, and December 10, 2014. As a result, the interest cannot be claimed for invoices older than June 16, 2011, and December 10, 2011.

Considering this limitation, the TNERC directed TANGEDCO to rework its interest computation at 12% per year for payments delayed beyond 30 days from the receipt of the power bill after deducting any payments already made. The Commission did not pass an order regarding the court fees incurred.

Mercom’s real-time renewable energy Regulatory Updates has earlier tracked similar petitions; in one case, TNERC directed 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. In another case, the state regulator had asked the DISCOM to rework the late payment surcharge at 12% per year for the delayed payments to a wind generator.

Recently, the Ministry of Power proposed ‘Late Payment Surcharge Rules 2020.’ As per the proposed rules, the surcharge on the outstanding payment will increase by 50 basis points each month after the first month’s expiry, subject to a maximum of the applicable bank rate plus 200 basis points.

Image credit: Photo by American Public Power Association on Unsplash