Tribunal Sets Aside KERC Order, Reinstates Tariff of ₹4.50/kWh for Five Wind Generators

The Appellate Tribunal for Electricity (APTEL) granted relief to five wind generators and set aside the order issued by the Karnataka Electricity Regulatory Commission (KERC), which had reduced the generic tariff to ₹3.74 (~$0.05)/kWh for wind projects commissioned before September 04, 2017.

The tribunal noted that the tariff of ₹4.50 (~$0.06)/kWh would be applicable for the wind projects for 25 years with effect from March 31, 2017. It also directed the state Commission to approve the PPAs signed with the Hubli Electricity Supply Company Limited (HESCOM).

Background

Eswari Green Energy LLP, The Impetus Associates LLP, Ahill Apparel Export Private Limited, Laurel Apparels, and Shakti Masala Private Limited had filed appeals before the tribunal against the order passed by KERC that denied them the tariff of ₹4.50 (~$0.06)/kWh and instead reduced the tariff to ₹3.74 (~$0.05)/kWh.


The appellants own and operate wind power projects of capacities 2 MW to 10 MW in the Vijaypura district of Karnataka, and the projects fall in the license area of HESCOM.

The KERC, in its order dated September 04, 2017, had adopted the tariff of ₹3.74 (~$0.05)/kWh for the sale of power from these wind projects to the state electricity distribution licensees, which also included HESCOM. These wind projects were duly commissioned on March 31, 2017, and the power purchase agreements (PPAs) with HESCOM were signed on March 24, 2017. The tariff stipulated in the PPA was ₹4.50 (~$0.06)/kWh, and the state Commission had established it in its earlier order dated February 24, 2015.     Then on September 04, 2017, the state Commission passed the impugned order revising the generic tariff for wind power projects and the mandatory procurement of wind power through competitive bidding. This order modified the earlier order dated and determined the lower tariff for wind power projects at ₹3.74 (~$0.05)/kWh instead of ₹4.50 (~$0.06)/kWh.

The generic tariff determined had to be applied prospectively for the wind projects that are commissioned after the order and to these wind power projects that were already commissioned. The petitioners said that the order was unfair and unjust because their wind power projects had been certified by Karnataka Power Transmission Corporation Limited and also HESCOM to have been duly commissioned on March 31, 2017.

Tribunal’s Analysis

The tribunal noted that the commercial operation date is not contingent on electricity injection into the grid, as argued by the respondents. It said that the reference made by HESCOM and the state Commission to the actual energy injection and the logbook data to argue that the projects were not commissioned is contrary to the definition of commercial operation Date in the PPA.

Still, it signifies the date on which availability of the project for commercial operation is attained. In the case of the wind projects, the availability had been achieved on March 31, 2017.

The tribunal further added that the order of 2015 was generic and it would have universal application. But the fact remains that the respondent did not engage the appellants in any such renegotiation. Instead, it had submitted the PPAs for approval of the same, showing a willingness to pay the tariff of 2015. The subsequent order of the Commission reducing the tariff cannot be treated as one modifying the existing PPA.

The parameters in the order concerning FY 2017-18 and onwards cannot be applied to the projects commissioned by the year 2015-17. Their application to these projects is erroneous as investments had already been made by 2016 -17, and these were commissioned on March 31, 2017.

The tribunal stated that the order dated February 24, 2015, by which the tariff was set at ₹4.50 (~$0.06)/kWh was made applicable to the wind generators commissioned during five years from October 10, 2013. By such dispensation, the rate was to remain valid until October 09, 2018. At best, the date of revision of the tariff, i.e., September 04, 2017, could be taken as the last date before which the earlier tariff regime’s benefit could be availed.

“It is not denied that the state Commission has approved the PPAs for several wind power projects post-April 01, 2017, with the tariff of ₹4.50 (~$0.06)/kWh. These wind projects are similarly placed projects, and the approval for such PPAs has been given to such projects after the impugned order dated September 04, 2017. This makes the impugned order discriminatory,” the tribunal added.

In May this year, KERC issued an order stating that the generic tariff for wind power projects will continue to remain the same at ₹3.26 (~$0.04)/kWh as determined in February 2019. The Commission said that the tariff of ₹3.26 (~$0.04)/kWh would also be the ceiling tariff for tariff-based reverse bidding for wind projects.

Previously, Mercom reported that KERC had issued an order directing all DISCOMs in the state to procure wind power according to the competitive bidding guidelines for wind projects in India issued by the Ministry of Power.

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