The Appellate Tribunal for Electricity (APTEL) has overturned orders by the Tamil Nadu Electricity Regulatory Commission (TNERC) that had imposed increased charges on wind power producers.

Background

The present appeal comprises a batch of appeals filed by the Tamil Nadu Spinning Mills and the Indian Wind Power Association, challenging the orders passed by TNERC in 2016.

The issues raised were whether TNERC was justified in directing that transmission and wheeling charges be levied based on installed capacity rather than actual units generated and whether increasing the banking charges from 5% to 10% was warranted.

The petitioners submitted that the banking charges were fixed at 2% in 1986 and raised to 5% in 2001. The figure remained at 5% in the 2006 tariff order. TNERC retained the 5% figure in its tariff order in 2009 and continued this charge until 2012.

The Commission increased the rate to 10% between 2012 and 2016. It passed the 2016 Wind Tariff Order, increasing the banking charges to 12%, which was also challenged in one of the present appeals. The banking charges were further increased to 14% under the 2018 Wind Tariff Order, which the Tribunal set aside in the same year.

APTEL chose not to intervene in the existing banking charges rate, set at 12%.

TNERC justified the increase by arguing that banking creates financial losses for Tamil Nadu Generation and Distribution Corporation, as the distribution company has to purchase high-cost power to supply banked energy during non-wind seasons.

Tribunal Analysis

APTEL noted that TNERC failed to conduct a detailed, data-driven study and to engage stakeholders meaningfully before increasing banking charges.

The Tribunal also dismissed TNERC’s justifications. It emphasized that energy banking is a critical incentive for wind energy development. Any arbitrary increase in banking charges threatens the financial viability of renewable projects.

For these reasons, the Tribunal reinstated the pre-2016 charges and directed the state Commission to conduct a detailed study to determine the charges and decide the matter afresh.

In June, APTEL overturned the Andhra Pradesh Electricity Regulatory Commission’s termination of a power purchase agreement for 60 MW of Guttaseema Wind Energy Company’s 80 MW wind project.

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