Contractual Agreement Mandatory for Banking of Energy by Project Developer: APTEL

Lalpur Wind Energy had filed an instant appeal against KERC and others

February 13, 2019


Provisional interconnection approval by a state load dispatch center is not sufficient for banking of energy by any developer and it will not be responsible for pumping power without any contractual agreement, the Appellate Tribunal for Electricity (APTEL) has ruled.

APTEL’s ruling came on heels of an instant appeal by Lalpur Wind Energy Private Limited against the Karnataka Electricity Regulatory Commission’s (KERC) order dated November 11, 2015.

Lalpur Wind Energy has set up a 44 MW wind farm at Haveri and Dharwad districts in Karnataka. The project consisted of 55 wind energy generators which have been divided into five groups. The project was meant for sale of power to third parties under open access by utilizing the existing transmission and distribution network of the Karnataka Power Transmission Corporation Ltd (KPTCL), Hubli Electricity Supply Company Ltd. (HESCOM), and Bangalore Electricity Supply Company Ltd. (BESCOM).

However, Lalpur Wind Energy has now argued that KERC denied its claim of banked energy (12.79 MUs) for the period from the date of commissioning of the power project to the date of execution of the wheeling and banking agreement. Furthermore, the state commission also refused to allow the carry forward of such banked power for a period of one year.

In its earlier order, the KERC had said that DISCOMs are only liable to pay average pooled power purchase cost for the average energy injected into the grid for a period of 15 days for four groups and 5 days for one group.

Lalpur Wind Energy, in its appeal to the APTEL, complained that the state commission ignored the fact that DISCOMs have delayed the execution of the wheeling and banking agreement and unduly benefitted from the energy generated by the project.

Lalpur Wind Energy cited many other cases such as Fortune Five Hydel Projects Pvt. Ltd. and Green Infra Wind Power Generation Ltd., where DISCOMs had to pay the average pooled power purchase cost rate for the period between the commissioning of the project and the execution of wheeling and banking agreement.

On the other hand, DISCOMs argued that Lalpur Wind Energy is not entitled to any compensation on account of delay in executing the agreement as no contractual agreement was entered between the parties.

They further argued that the provisional interconnection approval issued by KPTCL to Lalpur Wind Energy clearly states that in the absence of necessary approvals for banking of energy by the developer, KPTCL will not be responsible for any pumping of power without contractual agreement.

Therefore, injecting energy into the grid in the absence of wheeling and banking agreement or any other contractual arrangement would be considered unscheduled energy and no claim can be made against it. DISCOMs also denied any delay in executing the agreement.

The state commission in its order has mentioned an earlier judgement of Indo Rama Synthesis (I) Ltd. v. MERC ((2011) APTEL 77) –

“The generators and the licensees are expected to follow the schedule given by SLDC in the interest of grid security and economic operation. If a generator connected to the grid injects power into the grid without a schedule, the same will be consumed in the grid even without the knowledge or consent of distribution licensees. However, such injection of power is to be discouraged in the interest of secure and economic operation of the grid.”

APTEL concurred with the state commission’s views and said that it has passed the order in accordance with law, considering various other decisions and there does not seem to be any need for further interference.

Earlier, a vacation bench of the Karnataka High Court imposed an indefinite stay on the Karnataka Electricity Regulatory Commission’s (KERC) order that levied 25 percent of the normal transmission charges as wheeling charges for open access consumers in the state.

In May 2018, KERC had levied 25 percent of the normal transmission charges as wheeling charges for open access consumers in the state. The wheeling charges were five times more than the charges imposed in the state earlier. According to the KERC order passed in 2014, just five percent of the transmission charges were levied as wheeling charges in the state of Karnataka. This decision to increase the wheeling charges in the state came at a time when various states in the country are either reducing or nullifying it.


Nitin is a staff reporter at and writes on renewable energy and related sectors. Prior to Mercom, Nitin has worked for CNN IBN, India News, Agricultural Spectrum and Bureaucracy Today. He received his bachelor’s degree in Journalism & Communication from Manipal Institute of Communication at Manipal University and Master’s degree in International Relations from Jindal School of International Affairs. More articles from Nitin Kabeer