Three Solar Developers Say Uttar Pradesh Commission Reduced Tariffs Arbitrarily

The tribunal said that the grievances could be sorted out through mediation and didn’t warrant resorting to the civil procedure code


The Appellate Tribunal for Electricity (APTEL) has asked three solar power developers to verbally negotiate their disputes with the Uttar Pradesh Electricity Regulatory Commission regarding the adoption of tariffs.

The petitions were filed as the tariffs decided by the Commission in these three cases were lower than what was discovered through competitive bidding.

In all three cases, the appellants filed petitions contesting against the Uttar Pradesh Electricity Regulatory Commission’s (UPERC) decision to adopt a tariff that was lower than the rate discovered through competitive bidding for solar projects in the state.

The solar project developers were – Sukhbir Agro Energy Limited, Adani Green Energy (Uttar Pradesh) Limited, and Lohia Developers (India) Private Limited. The power purchase agreement (PPA) for the projects by Sukhbir Agro and Lohia Developers was signed in December 2017 while Adani Green signed the PPA in December 2015.

In its petition to the APTEL, Lohia Developers said a tariff of ₹7.95 (~$0.106)/kWh for 12 years was discovered through competitive bidding for its solar projects in the state. However, when a petition was filed with the Commission, the tariff was reduced to ₹7.02 (~$0.094)/kWh. The Commission further directed the parties to enter into a PPA by modifying the necessary clauses.

Lohia argued that the Commission did not have the authority to reduce the tariff discovered through competitive bidding and sought for the APTEL to intervene with a solution.

Sukhbir Agro also filed a similar petition. It stated that its tariffs for three solar projects in the state – ₹8.43 (~$0.113)/kWh, ₹8.23 (~$0.110)/kWh, and ₹8.60 (~$0.115)/kWh, for 12 years – were lowered to ₹7.02 (~$0.094)/kWh by the Commission. The Commission directed the parties to enter into a PPA with the necessary modifications in this case as well.

Sukhbir Agro contended that the Commission’s order was arbitrary and that it was beyond its scope to make changes to tariffs discovered through competitive bidding.

Separately, Adani Green Energy (Uttar Pradesh) Limited had filed a petition with the APTEL seeking a resolution for its dispute with the Uttar Pradesh Power Corporation Limited (UPPCL). Adani had previously signed a PPA with the UPPCL for the supply of 50 MW of solar power for 12 years.

Adani stated that there was a delay in the commissioning of its projects because of lapses on the part of the UPPCL. It further stated that the Commission had wrongly prescribed a tariff of ₹5.07 (~$0.068)/kWh in its tariff approval order for the projects while the actual tariff discovered through competitive bidding was ₹8.44 (~$0.113)/kWh. Adani also argued that the Commission had exceeded its jurisdiction by indiscriminately modifying the tariff discovered through competitive bidding.

The state distribution company (DISCOM), in its response to both claims, contended the lapse was on account of a delay in the construction of a dedicated transmission line and that it was not accountable for this. It also explained that Adani’s petition for tariff adoption was filed only after two years of signing the PPA. The UPPCL added that this was Adani’s fault.

In all three appeals, the APTEL said that the parties could “thrash out their differences sitting across the table over a dialogue.”

“One should be practical and cannot close eyes to the fact that conclusion of litigation right from the institution of a petition before the Commission till it gets finalized, would take considerable time … It could be a generator not getting the legally determined dues, or it could be a DISCOM with a huge financial burden which has to pay the determined tariff plus surcharge for a considerable period,” the APTEL said.

In conclusion, the APTEL directed all the parties to suggest the names of two mediators to help them arrive at a mutually agreeable settlement.

Meanwhile, UPPCL recently filed a petition with the UPERC seeking it to invalidate the cancellation of a power sale agreement for 300 MW of wind power.

Also, recently, the state modified the Central Electricity Regulatory Commission’s deviation settlement mechanism regulations to take care of the state-specific needs.