Karnataka Regulator Approves Tariff of ₹8.40/kWh for a Delayed Solar Project
The Commission also approved the extension of six months granted by BESCOM
March 31, 2021
The Karnataka Electricity Regulatory Commission (KERC) has approved a tariff of ₹8.40 (~$0.115)/kWh as per the power purchase agreement (PPA) signed between Bangalore Electricity Supply Company Limited (BESCOM) and the project developer, Cambria Solar. The Commission also approved the extension of six months granted by BESCOM for the solar project’s commissioning date.
Cambria Solar had filed a petition requesting the Commission to approve the extension of six months granted by BESCOM to the scheduled commercial operation date (SCOD) as agreed between the parties. It had also requested the Commission to approve the tariff of ₹8.40 (~$0.115)/kWh from the project’s commercial operation date for the entire term of the PPA.
Ganagaraju, a land-owning farmer, applied for a 3 MW solar power project under the solar program initiated by the Karnataka Renewable Energy Development Limited (KREDL). The project was allotted to him.
BESCOM, in its meeting held on July 25, 2015, gave consent for the purchase of solar power from the project. The parties signed the PPA on July 7, 2015, and subsequently, the PPA was approved by the Commission on August 26, 2015.
As per the PPA, the scheduled date of completion was to be achieved within 18 months from the PPA signing. The power to extend the time for commissioning was vested with BESCOM.
According to the PPA, the project promoter had the right to form a special purpose vehicle (SPV) after the PPA execution. Accordingly, Cambria Solar was incorporated as an SPV.
The developer informed BESCOM on November 29, 2016, that it had applied for the bay allocation from the Karnataka Power Transmission Corporation Limited (KPTCL) but had not received the bay allotment due to augmentation of the transformer at 66/11 KV Moregere Substation. The developer sought an extension of six months from January 6, 2017, which it perceived to be the SCOD. KPTCL granted evacuation approval to the petitioner.
Later, BESCOM granted an extension of six months from the SCOD as per the PPA, subject to the bank guarantee extension.
The developer said it was entitled to a tariff of ₹8.40 (~$0.115)/kWh, as per the PPA.
BESCOM, in its submission, said that as the developer was unable to execute the project on time, a letter was addressed to it seeking for extension of time for commissioning the project.
The Government of Karnataka issued an order on November 24, 2016, directing all the electricity supply companies (ESCOMs) to constitute a three-member committee to consider and dispose the farmers’ and developers’ requests.
Finally, after detailed discussions, the committee suggested the approval be granted for the extension of SCOD for up to six months.
The Commission said that it was not in dispute that PPA was executed on July 7, 2015, and the effective date meant the date of signing of the agreement by the parties, i.e., July 7, 2015.
The regulator noted that in pursuance of the government’s direction, a three-member committee decided to approve an extension of SCOD by six months.
The Commission noted that the developer had applied for power evacuation on September 27, 2016, and KPTCL gave approval for evacuation on December 6, 2016, after a lapse of more than two months. Moreover, BESCOM and KPTCL had not denied these facts.
Considering these facts and considering a substantial investment in the project, BESCOM granted an extension by six months.
The regulator noted that the petitioner was entitled to the tariff of ₹8.40 (~$0.115)/kWh from the commercial operation date because it had implemented the project within the extended time. Due to the ‘force majeure’ event, it could not commission the project within 18 months from the effective date.
Recently, KERC dismissed a petition filed by BESCOM for the redetermination of tariff for purchase of additional power or to relieve it from the obligation to purchase extra energy beyond the contracted capacity specified in the PPA.
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