APTEL Quashes KERC Order, Says Solar Developer Entitled to Original Tariff

The Appellate Tribunal For Electricity has quashed a Karnataka Electricity Regulatory Commission (KERC) order that rejected Photon Suryakiran’s petition asking for Bangalore Electricity Supply Company (BESCOM) not to reduce the tariff of the delayed solar project from ₹7.05 (~$0.084)/kWh to ₹6.51 (~$0.078)/kWh.

The Tribunal directed BESCOM to refund any liquidated damages recovered, with interest. BESCOM must also pay the tariff at ₹7.05 (~$0.084)/kWh, including any differential amounts due from the date of commissioning, with interest.

Background

Photon Suryakiran filed an appeal against the order passed by KERC dated July 13, 2021. Photon challenged the ruling that the extension of the Scheduled Commissioning Date (SCOD) granted by BESCOM was illegal. The ruling held that the original SCOD should remain, and Photon was liable for liquidated damages and a reduction in tariff under the Power Purchase Agreement (PPA).

Photon argued that its case was similar to another case, where the Tribunal ruled in the developer’s (Azure Photovoltaic) favor, exempting it from paying liquidated damages and maintaining the bid tariff. It sought similar relief be granted in their case.

A comparative analysis between the two cases (Photon Suryakiran and Azure Photovoltaic) was presented, highlighting similarities in the events and timelines of both cases. Here are the key points:

Photon Suryakiran faced a delay of 144 days in getting the approved PPA from KERC, while Azure Photovoltaic experienced a 121-day delay. Photon Suryakiran requested extensions, citing delays in land procurement, financial issues, and the Cauvery River water dispute as force majeure.

Photon Suryakiran requested extensions twice, which BESCOM partially granted. Azure Photovoltaic also sought extensions and was eventually granted an extension by GESCOM.

Photon Suryakiran commissioned its project on December 13, 2016, and Azure Photovoltaic on March 26, 2017. BESCOM reduced the tariff for Photon Suryakiran to ₹6.51 (~$0.078)/kWh as per the prevailing tariff at the time of commissioning.

BESCOM argued that the delays were primarily due to Photon Suryakiran’s issues procuring land and financial sanctions. It contended that these issues did not qualify as force majeure events under the PPA. It also noted that Photon Suryakiran had accepted the payment of liquidated damages, differentiating it from Azure Photovoltaic’s case.

BESCOM contended that it reasonably granted extensions under the PPA to Photon to commission its plant. However, it also asserted that these extensions necessitated the imposition of liquidated damages. Initially scheduled to be completed by July 13, 2016, the project was delayed and eventually commissioned on December 13, 2016. Consequently, under the PPA, a lower tariff rate of ₹6.51 (~$0.078)/kWh was applied instead of the original ₹7.05 (~$0.084)/kWh, and liquidated damages were imposed.

Tribunal’s analysis

The Tribunal previously addressed a similar issue, where it was decided that Azure’s delay in achieving the Commercial Operation Date (COD) justified the imposition of liquidated damages but did not warrant a reduction in the tariff rate. The Tribunal’s decision in that appeal, which became final, served as a precedent for the current case.

In the current appeal, Photon raised grievances similar to those in the earlier case, challenging the reduced tariff and liquidated damages imposed by BESCOM. Photon argued that the delay in commissioning was not entirely its fault, pointing out that the approved PPA was provided with a significant delay attributable to procedural delays by Karnataka Renewable Energy Development Limited, not Photon.

Photon requested further extensions due to disruptions caused by the Cauvery River dispute, eventually achieving COD on December 13, 2016, well before the extended commissioning date of January 12, 2017. BESCOM imposed liquidated damages for a 31-day delay beyond the extended COD but did not honor the agreed tariff rate.

The Tribunal recognized that the initial delay was not Photon’s fault and should not have resulted in liquidated damages or a reduced tariff rate. The effective COD should account for the delay in PPA approval and the force majeure due to the Cauvery dispute. Since Photon met the extended COD, no liquidated damages were warranted.

The Tribunal set aside KERC’s order dated July 13, 2021. It directed BESCOM to refund any liquidated damages recovered, with interest, within three months. BESCOM must also pay the tariff at ₹7.05 (~$0.084)/kWh, including any differential amounts due from the date of COD, with interest.

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