The Kerala State Electricity Regulatory Commission (KSERC), in a recent order, directed Inox Wind Energy, DJ Malpani-one of the co-petitioners, and the Kerala State Electricity Board (KSEB) to modify the clauses of the draft tripartite power purchase agreement (TPPA).
The Commission directed the parties to submit a modified draft TPPA for approval and a copy of the National Company Law Tribunal (NCLT) order dated January 25, 2021, regarding the restructuring of Inox Renewables.
Earlier, Inox Renewables and co-petitioner DJ Malpani had filed a petition seeking approval of the draft TPPA.
The Commission, in its earlier order, had determined the tariff of ₹4.09 (~$0.05)/kWh for a 16 MW project developed by Inox Renewables at KINFRA Textile Park, Kanjikode in Palakkad district of Kerala. Later, on April 5, 2019, the investor, DJ Malpani, filed a petition to approve the draft PPA to be executed with KSEB. Since Inox Renewables was the project developer, the Commission asked INOX to file a petition to approve the PPA, and the developer complied.
Later, on April 24, 2020, the Commission directed Inox Renewables, KSEB, and DJ Malpani to enter into a TPPA with KSEB for the 16 MW wind energy project.
Then, Inox Wind Energy filed an application seeking approval to substitute Inox Renewables with Inox Wind Energy. The petitioner submitted that as a part of business restructuring, Inox Renewables was amalgamated into Gujarat Fluorochemicals. Further, the NCLT approved the demerger of the renewable energy business of Gujarat Fluorochemical into its wholly-owned subsidiary Inox Wind Energy.
Also, the wind developer submitted that as per the draft TPPA, the tariff for power generated from the plant should be the levelized tariff of ₹4.09 (~$0.05)/kWh with accelerated depreciation benefit, as per the KSERC order.
During the hearing, the investor DJ Malapani said that they would like to raise the invoice at ₹4.54 (~$0.06)/kWh, the levelized tariff approved by the Commission without the benefit of accelerated depreciation. In reply, KSEB clarified that all the parties had mutually agreed to raise the bill at ₹4.09 (~$0.05)/kWh with the benefit of accelerated depreciation, and during the last three years, it had been remitting the charges at ₹4.09 (~$0.05)/kWh. So, it was not correct to change it at this stage.
The Commission, after the detailed examination of the draft TPPA, suggested the following modifications:
- The petitioner has been asked to submit the schedules referred to in the draft TPPA along with the petition filed before the Commission within ten days from the date of the order.
- In case KSEB desires and the generator is willing to supply power beyond the agreed period of 25 years, the licensee should file a formal petition before KSERC at least 12 months before the agreement expires, seeking approval with complete documents including detailed justification, tariff, and its justification, and the PPA.
- The clause of the TPPA gives freedom to KSEB not to purchase electricity from this project even without any reasonable grounds. Similarly, if the price of electricity goes up, the generator can also refuse to supply power to KSEB. Such possibilities should be avoided.
- KSEB clarified that the rate of reactive energy provided in the draft TPPA is the same as approved by the Commission in 2017. Since nearly four years have passed, the KSEB and the petitioners should mutually decide and include the rate.
- It is clarified that the tariff for electricity availed from KSEB during the shutdown of the generator or any other maintenance work during the term of the TPPA should be at the prevailing tariff.
- The provisions of the TPPA should make it clear that the generator has to provide the generation data to the state load despatch center, even when the supervisory control and data acquisition visibility is not recorded. Clarifications are required about the instances when the data is to be transmitted by means other than automatic transmission.
- More clarity has been sought on the rate for excess energy during the billing period when the energy drawn from the grid happens to be more than the energy injected by the generator.
- The ‘force majeure’ clause should be modified as per the bidding guidelines.
- The termination clauses should be modified as per the bidding guidelines.
- The draft TPPA gives freedom to the parties to modify the clauses of this agreement through mutual discussions. Hence any modifications in the agreement should be done only with the approval of the Commission.
Considering all the facts, the Commission directed the petitioners and KSEB to incorporate the modifications and submit all the schedules referred to in the draft TPPA and the modified draft TPPA before it for approval.
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Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.