Telangana DISCOM Directed to Clear Dues to Solar Power Generator

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The Telangana State Electricity Regulatory Commission (TSERC) recently directed the state distribution company (DISCOM) to pay for the electricity supplied by a solar power generator along with interest within 45 days.

The state regulator also directed the DISCOM to open a ‘Letter of Credit’ in the petitioner’s favor to make all future payments promptly.

Winsol Solar Fields had filed a petition seeking the release of dues along with interest for late payment and consequential relief of the payment of future bills promptly per the power purchase agreement (PPA). The company has a 10 MW solar power project in the Mahabubnagar district of Telangana.

Background


Winsol Solar Fields is a power generating company that operates a 10 MW solar power project connected to 132/33 kV Kodangal substation in the Mahabubnagar district of Telangana.

In 2014, the Southern Power Distribution Company of Telangana (TSSPDCL) and Northern Power Distribution Company of Telangana (TSNPDCL) issued a tender to procure 500 MW of solar power through a tariff-based competitive bidding process.

First Solar Power India, the petitioner’s parent company, participated in the bidding process and emerged successful quoting a tariff of ₹6.90 (~$0.087)/kWh. TSSPDCL executed the PPA on April 10, 2015, with First Solar to purchase energy for 25 years. Later, First Solar incorporated the petitioner as its 100% owned subsidiary, and accordingly, the PPA was revised in the petitioner’s name.

Winsol Solar Fields had been issuing monthly invoices to TSSPDCL for the energy supplied. As per the PPA, TSSPDCL was to make the payments within 30 days of the meter reading date. The solar generator was entitled to the late payment surcharge (LPS) as per the PPA, which provides that in case of delay in payment beyond 30 days, TSSPDCL must pay interest at the prevailing SBI bank rate on the outstanding amount.

It added that the unpaid monthly bills from November 2020 to September 2021 amounted to ₹114.84 million (~$1.45 million). Also, TSSPDCL had not even paid the LPS on the delayed payments for invoices raised before November 2020 and, therefore, was liable to pay ₹31.01 million (~$390,639).

The solar power generator clarified that along with the communications regarding non-payment of the outstanding amounts, it also wrote to TSSPDCL for the opening of the revolving ‘Letter of Credit,’ but without any effect.

Commission’s analysis

The Commission observed that while the respondents had not paid the petitioner for the energy invoices raised since November 2020, they were recovering the tariff for the energy procured from the Kodangal Project from the end consumers. The cost of procurement of power from the petitioner had been accounted for in the tariff charged by TSSPDCL from its consumers. Despite recovering these amounts, payments to the petitioner were being withheld.

“The non-payment of dues by the DISCOM has a cascading effect that not only adversely impacts the solar project of the petitioner, thereby causing tremendous loss to the investors for no fault of theirs, but also to the banks and financial institutions which have financed the solar project,” the Commission said.

The Commission stated that in the absence of any contest by the state DISCOM, there should not be any dispute on the amounts payable by the DISCOM to the petitioner.

Considering all the facts, the Commission granted the petitioner relief for the billed amount and interest claims. It directed the respondent to put in place an irrevocable revolving Letter of Credit issued in favor of the power generator within 45 days.

In March last year, the Telangana Solar Power Developers’ Association urged the state Chief Minister to advise the Telangana State Power Coordination Committee and Telangana state DISCOMs to clear at least six months’ payments due to solar power developers immediately.

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