The Appellate Tribunal for Electricity (APTEL) has ordered a distribution company (DISCOM) in Karnataka to pay a tariff of ₹6.89 (~$0.08)/kWh for 50 MW solar projects.

It also directed the refund of the deductions made by the DISCOM from the discovered tariff to Azure Sunrise, a special purpose vehicle of Azure Power India.

Background

In 2014, Karnataka’s Renewable Energy Development issued a tender for developing 500 MW of solar projects, with 50 MW awarded to Azure Power. The company incorporated the petitioner, Azure Sunrise, to execute the project. It signed a power purchase agreement (PPA) with distribution licensee Chamundeshwari Electricity Supply Corporation (CESCOM).

Azure approached the Karnataka Electricity Regulatory Commission (KERC) in 2014, contending that the PPA  was not effective and executable.

The petitioner received the duly approved, effective, and executable PPA in 2015, resulting in a delay of 137 days from the signing date. In 2016, KERC set penalties for the petitioner after granting only 25 days of extension from the original signing date. It directed CESCOM to enforce the penalties and reduce the tariff.

Aggrieved by the KERC order, the petitioner filed an appeal before APTEL, which had determined an interim tariff of ₹4.36 (~$0.05)/kWh while the matter was ongoing. In 2020, it set aside the Commission’s order, declaring that its decision to reduce the extended time and tariff, along with imposing penalties, was not sustainable under the law.

The petitioner issued invoices at the PPA tariff per the Tribunal’s decision. However, CESCOM did not repay the petitioner or pay the originally discovered tariff of ₹6.89 (~$0.08)/kWh per APTEL’s order.

The petitioner wrote to CESCOM seeking compliance with the order. However, CESCOM failed to pay ₹890 million (~$10.3 million) along with the interest amount of ₹290 million (~$3.3 million).

Azure approached APTEL again seeking implementation of the 2020 order.

Tribunal’s Analysis

APTEL noted that the petitioner’s prayer was within the confines of what was finally adjudicated. It held that the ₹4.36 (~$0.05)/kWh interim tariff was superseded by its final order applying the discovered tariff.

The Tribunal restored the original PPA terms, specifically the tariff of ₹6.89/kWh, and nullified the imposition of penalties.

The Tribunal stated that CESCOM’s conduct was highly objectionable, and it not only militated against the binding nature of judicial pronouncements but also bordered on contemptuous disregard for the rule of law.

It acknowledged that the petitioner’s grievance that the continued payment at the interim rate, despite the final judgment, caused it significant financial prejudice.

APTEL ordered CESCOM to pay to the petitioner the following within six weeks:

• The differential amount between ₹6.89 (~$0.081)/kWh and ₹4.36 (~$0.05)/kWh for all energy supplied from the project’s commercial operation date till now or the effective date of realization, whichever is later, along with interest per the late payment surcharge provisions under the PPA
• Refund all liquidated damages recovered from the petitioner, with interest, along with carrying costs

Recently, APTEL ordered distribution companies in Karnataka to refund safeguard duty and Integrated Goods and Services Tax expenses incurred by a solar project developer on excess modules installed before the project commissioning date.

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