Torrent Power to Pay Revised Tariff for 750 kW of Rooftop Solar to Surat’s Municipal Body

SMC had received ₹20.5 million from the MNRE in the form of central financial assistance for the projects

December 31, 2020


The Gujarat Electricity Regulatory Commission (GERC) has directed Torrent Power Limited to pay the revised tariffs for rooftop solar projects to the Surat Municipal Corporation (SMC).

The new tariffs are based on the rate determined after factoring in the capital financial assistance (CFA) provided by the Ministry of New and Renewable Energy (MNRE).

The petitioner, Torrent Power Limited (TPL) had filed a petition in April 2014, seeking approval for the purchase of power generated from 750 kW of rooftop solar projects installed at 14 different locations by the SMC. It expected the commission to set a tariff for the projects.

The commission had previously established a levelized tariff of ₹9.44/kWh (~$0.131) for 25 years, factoring in the SMC’s receipt of CFA to the tune of ₹22.5 million (~$314,518) from the MNRE. SMC, however, filed an appeal against this decision requesting the Appellate Tribunal for Electricity (APTEL) to factor in the actual subsidy received and to re-determine the tariff.

The tribunal stated that the basic objective of granting capital subsidy in the form of CFA by the MNRE was to bring down the project cost and tariff for the ultimate benefit of the consumers. The CFA being approximately 30% of the project cost and without any interest, is a considerable benefit in setting up the solar projects and cannot be considered as a mere incentive as being claimed by the SMC. The tribunal added that it is also clearly stipulated in the CERC regulations that subsidy or incentive by the central or state government should be taken into consideration while determining the tariff for renewable projects. Further, it noted that being a municipal corporation, SMC was exempt from income tax, which is another incentive.

The tribunal had determined that since the CFA accounted for 30% of the capital cost and was interest-free, the SMC cannot claim a higher generic tariff along with the additional benefits of the CFA, which came in the form of capital subsidy and income tax exemptions.

The tribunal then added that it would, however, factor in the actual CFA received by the SMC of ₹20.5 million (~$286,561) when establishing the new tariff. It said that since the CFA was received in two tranches on July 17, 2014, and March 21, 2017 (after the completion of the projects), and tariffs would be determined accordingly. It consequently ordered the SMC to submit documents and details for the same.

The commission, in its order, has cited the APTEL’s order, which directed the tariffs to be set based on the actual subsidy received by the SMC. The APTEL had additionally ordered the generic tariff to be allowed for the period up to the receipt of the CFA.

The commission, in its order, allowed for the following tariffs based on the APTEL’s directive:

It ordered Torrent Power to pay the difference in the amount based on the above tariffs to the respondent within 15 days of the order.

Additionally, the commission also denied the SMC’s request for interest on the differential amount as the request was not reasonable because the parties had agreed not to charge interest on the amount outstanding until the Commission redetermined the tariff.

To SMC’s request that the Commission to take action against Torrent Power, it noted that because the SMC had taken more than a year to submit the details of actual CFA received, its conduct was not in conformity of regulatory requirements and it had no case to demand action against Torrent Power. Therefore, the commission rejected this request.

Just recently, the state issued a draft notification regarding the second set of amendments for its net metering regulations for grid-connected rooftop solar systems.

Earlier, the GERC dismissed a petition requesting it to purchase surplus energy from open access solar projects set up for captive use or third-party sale at the lowest tariff discovered through competitive bidding or APPC. The commission stated that solar projects set up in the state of Gujarat and the capacity utilization factor (CUF) set up in other states vary from site to site and therefore are not comparable.