Tamil Nadu Commission Asks DISCOM to Pay ₹24.1 Million in Wind Energy Dues

TANGEDCO was also asked to pay 10% interest on the delayed amount

August 24, 2020


The Tamil Nadu State Electricity Regulatory Commission (TNERC) has directed the Tamil Nadu Generation and Distribution Company (TANGEDCO) to pay wind generators ₹24.1 million (~$321,701) along with interest at 10% towards delayed payments for the supply of wind power.

The TNERC received petitions from KBD Sugars and Distilleries Limited, D.A. Srinivas, and D.A. SathyaPrabha for 27 MW of wind projects, collectively. The petitioners sought the Commission to direct TANGEDCO to pay their dues along with interest on account of delays. The details of the dues and the wind projects under each petition are provided below:

Amount Payable to Wind Generators in Tamil Nadu towards Outstanding Dues

The petitioners claimed that the stipulated period for recovery of dues from high-tension consumers by TANGEDCO was seven days as per their power purchase agreements (PPAs), and if this were not adhered to, interest would be automatically charged on these payments.

The petitioners said that the payments were delayed by one year or more, but TANGEDCO has not included the interest due on any of these delayed payments. They explained that they have been accounting for payments received from TANGEDCO towards interest due first and then the remainder towards energy dues.

After these adjustments, the cumulative dues payable by TANGEDCO stood at around ₹24.1 million (~$321,701). The petitioners also claimed ₹148,062 (~$1,978) in court fees.

The petitioners had filed a memo accepting TANGEDCO’s proposal to pay interest at 6% if the dues were paid within 60 days from the date of the invoice, and 10% otherwise. However, TANGEDCO failed to make these payments in full.

“We have no manner of doubt on the question of entitlement of interest on the part of the petitioner for the delay in settlement. However, the rate at which the interest is payable by the respondent to the petitioner for the late payment of invoice amount remains to be settled,” the Commission said after analyzing the submissions of all the parties involved.

It cited a previous order issued by the Supreme Court of India wherein a 10% interest rate was prescribed for delayed payments since there were no provisions in the PPA. It said that this rate was applied to these cases, as well.

It explained that since payments were not made within 60 days, it was clear that an interest rate of 10% on the dues would apply.

It subsequently directed TANGEDCO to rework its calculations for the amount due based on the prescribed 10% interest rate on the delayed payments and to settle its dues with the petitioners. The dues included both the principal amount due towards energy supplied and the interest payable due to delays after deducting any previously made payments.

The Commission directed TANGEDCO to make these payments within three months from the date of the issue of its order. It added that there would be no order concerning the legal costs incurred by the petitioners.

Recently, the TNERC also directed the TANGEDCO to pay ₹74.8 million (~$998,885) to six wind power generators in interest due towards delayed payments for supplied power.

Previously, Mercom reported that payment delays were becoming a problem again for solar and wind project developers in India, especially in Andhra Pradesh, Tamil Nadu, and Telangana. Some instances in Madhya Pradesh and a DISCOM in Karnataka are also being blamed for long payment delays to developers.