DISCOM Directed to Pay ₹705 Million in Generation Based Incentive to a Wind Project

The Andhra DISCOM will have to pay a penalty of ₹100,000 (~$1,363) if there is a default

August 30, 2021


The Andhra Pradesh Electricity Regulatory Commission (APERC) has granted six weeks to a distribution company (DISCOM) in Andhra Pradesh for the payment of a withheld amount of ₹705.4 million (~$9.6 million) to a wind energy generator towards Generation Based Incentive (GBI) and Capacity Utilization Factor (CUF) components.


Vayu Urja Bharat filed a petition requesting the state electricity regulator to issue directions to the DISCOM to comply with its order dated August 31, 2019, for payment of ₹164 million (~$ 2.23 million) as power supply charges.

The petitioner is a generating company that owns and operates a 120 MW wind power project in the Anantapuram district. It also signed a 25-year power purchase agreement (PPA) with Southern Power Distribution Company of Andhra Pradesh (APSPDCL) to sell the generated power from the project.

According to the Commission’s order in 2018, the tariff was set as ₹4.84 (~$0.066)/kWh without accelerated depreciation (ACD). The petitioner commissioned the project in three phases in 2017.

The petitioner stated that it was raising monthly bills. However, APSPDCL was making only part payments after deducting GBI and high tension (HT) services.

The company sought a direction for the payment of ₹95.77 million (~$1.3 million) against a partially paid monthly invoice from March 2017 to May 2018. It also urged the Commission to direct APSPDCL to pay ₹1.13 billion (~$15.46 million) towards unpaid monthly bills from June 2018 to March 6, 2019, ₹64.70 million (~$881,107) towards late payment surcharges within seven days from the date of order, and 15% per annum carrying cost.

The petitioner also contended that APSPDCL must pay ₹705.4 million (~$9.6 million) towards GBI and CUF components. APSPDCL was liable to pay for all the units generated as per the tariff agreed under the PPA and should not limit payment by placing a ceiling on the CUF.

The State Commission had earlier considered CUF of 23.5% to arrive at the tariff payable; that if the power generated is more than the CUF, DISCOMs are liable to purchase it. But considering such surplus power purchase as an additional benefit to the generator and an unjust burden, DISCOMs have paid the bills by placing a ceiling on CUF at 23.5%.

Regarding GBI, the power generator stated that GBI was only allowed for 70 MW capacity out of 120 MW as only 70 MW was commissioned by the end of 2017.

DISCOM’s response

In response to the petition, APSPDCL stated that it would clear the monthly bills to Vayu Urja Bharat over time as and when funds were available. However, it said that DISCOMs could not pay bills on time because of their grim financial condition.

APSPDCL said that Vayu Urja Bharat also provided the option to terminate the PPA in case of default. However, it did not choose to terminate the PPA, and therefore APSPDCL should not be burdened with the payment of interest for delayed payments.

The DISCOM informed the Commission that it relied on an order of the High Court, which directed it to pay ₹2.43 (~$0.033)/kWh for the pending and future bills as an interim measure. Therefore, there was no non-compliance with any directions of the Commission.

APSPDCL also submitted the entire balance due as per the Commission’s order in 2019 was cleared with the payment of ₹556.4 million (~$7.59 million). In addition, the Commission had declared a CUF of 23.5% to arrive at the tariff payable per unit. Therefore, DISCOMs had to place a ceiling on CUF at 23.5%.

It also said that Vayu Urja Bharat had been receiving a subsidy from the Government of India in the form of GBI at ₹0.50 (~$0.0068) per unit with a ceiling of ₹10 million (~$136,497). In addition, in its order dated July 28, 2018, the Commission directed power generators to pass on GBI benefits to DISCOMs. Therefore, DISCOMs continued to reduce GBI amounts from the bills of the generators who received subsidies.

 Commission’s analysis

 The Commission noted that APSPDCL partially complied with the Commission’s order. Therefore, APSPDCL is liable to pay a penalty against non-compliance with the Commission’s order in full.

Since APSPDCL has been complying with the order in part and due to its grim financial condition, the Commission granted six weeks to APSPDCL to pay the withheld amount of ₹705.4 million (~$9.6 million) towards GBI and CUF components.

However, the Commission stated that if APSPDCL did not pay within six weeks, it would be liable to pay ₹100,000 (~$1,363) as a penalty apart from ₹6,000 (~$81.82) daily until the time the violation of the order continues after six weeks.

In 2018, APERC withdrew the GBI of ₹0.50 (~$0.0072)/kWh of electricity fed into the grid for a minimum of four years and a maximum of 10 years with a cap of ₹10 million (~$145,603)/MW offered to wind energy generators.

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