APTEL Affirms RERC’s Ruling on Claim Against Retroactive Impact on PPAs
The petitioner asserted that the 2014 regulations can’t be applied to earlier contracts
The Appellate Tribunal for Electricity (APTEL) has upheld the Rajasthan Electricity Regulatory Commission’s (RERC) decision dismissing a petition filed by Kishangarh Hi-tech Textile Park (KHTPL), contending that regulations should not retroactively impact Power Purchase Agreements (PPA).
KHTPL challenged the dismissal of its petition by the RERC and sought specific directions against the respondents— RERC, Rajasthan Rajya Vidyut Prasaran Nigam, and Ajmer Vidyut Vitaran Nigam. They aimed to impose open access charges (transmission tariff and wheeling charges) at 50% of the tariff rates as per the 2009 tariff regulation.
KHTPL also sought reimbursement of the extra open access charges of ₹4.45 million ($53,525). This was to be accompanied by interest for delayed payment at a rate of 1.25% per month collected by the respondents due to an excess claim of open access charges.
It also sought the provision of six-monthly banking facilities outlined in the 2009 tariff regulation.
In 2009, the RERC introduced tariff regulations that were effective until March 31, 2014. Among these regulations was Regulation 90, outlining transmission and wheeling charges, with a provision (90(3)) specifying a 50% reduction in transmission charges for renewable energy sources power stations compared to open-access consumers.
Following this, KHTPL completed an 8.4 MW wind power project in December 2010. To facilitate energy distribution, KHTPL entered into Energy Wheeling Agreements (EWAs) with respondents. These agreements secured a significant 50% concession on both transmission and wheeling charges, aligning with the 2009 regulations. Additionally, the EWAs allowed for a six-monthly banking of energy.
However, in 2014, RERC introduced new tariff regulations effective April 1, 2014, to March 31, 2019. These regulations brought changes to transmission and wheeling charges, setting them at 100%, and shortened the banking period from six to just one month.
Following this, the respondents applied these changes to KHTPL’s wind power project. The transmission and wheeling charges were revised, and the banking facility period was significantly reduced.
In response to these alterations, KHTPL contested the application of the 2014 regulations to its project, arguing that its wind power project fell under the purview of the 2009 regulations. The contention rested on the absence of any explicit provision in the 2014 regulations indicating repeal, amendment, or override of the 2009 regulations.
Despite these arguments, the RERC had dismissed KHTPL’s petition, following which the company approached APTEL.
APTEL considered arguments from both parties and reviewed the impugned order and case records.
KHTPL asserted that the 2014 regulations could not be applied to previously concluded contracts, emphasizing the absence of provisions indicating the repeal, amendment, or override of the 2009 Regulations.
In contrast, the respondents supported the impugned order, highlighting clauses in the EWAs executed in 2010, which stipulated that transmission and wheeling charges would align with the RERC order dated 23.01.2009 and its subsequent amendments.
Upon scrutinizing the relevant clauses (5A and 3) in the EWAs, the tribunal noted that the intention of the parties was not to maintain fixed terms for transmission charges and unutilized banked energy throughout the entire 20-year period.
APTEL cited a Supreme Court judgment, PTC India Vs. Central Electricity Regulatory Commission stating that regulations issued under the Indian Electricity Act can intervene and override existing contracts, aligning them with the regulatory framework.
Based on the Supreme Court’s precedent, APTEL ruled that the 2014 Regulations override existing agreements and must be aligned with them, and dismissed the appeal.
Recently, APTEL upheld RERC’s decision dismissing a similar petition filed by a wind energy generator, contending that regulations should not retroactively impact PPA.
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