APTEL Judgment dated August 02, 2021 in Appeal No. 160 of 2020
- Appeal was filed by Clearsky Solar Pvt Ltd (Clearsky) before the Appellate Tribunal for Electricity (APTEL) challenging the Karnataka Electricity Regulatory Commission (KERC) order dated May 29, 2020 (KERC Order) in relation to extension of COD and continuation of tariff of a 3 MW solar project under the Farmers' scheme of the Karnataka Solar Policy (Project).
- Clearsky was aggrieved by the KERC Order inasmuch as, KERC had set aside the extension of timelines for achieving Scheduled Commercial Operation Date (SCOD) which was granted by Gulbarga Electricity Supply Co Ltd (GESCOM) in terms of the Power Purchase Agreement (PPA) taking into consideration the genuine Force Majeure events which had affected the Project. Pertinently, the extension of timelines was a subject matter of the Supplementary PPA executed between Clearsky and GESCOM which KERC had unreasonably refused to approve. In complete disregard of the merits of the case, the Supplementary PPA was also set side and the tariff incorporated under the PPA at INR 8.40/kWh was unreasonably reduced to INR 4.36/kWh in addition to liquidated damages of INR 3.6 lakh.
- In arriving at the conclusions under the Impugned Order, KERC had completely brushed aside the fact that the construction of the entire Project (along with the associated infrastructure) was completed well within the original SCOD contemplated under the PPA. This was so evidenced by the statutory certificate issued by the Chief Electricity Inspector, Government of Karnataka (CEIG). However, the Project could not be put to commercial operation due to want of a formal order for land conversion (i.e. from agricultural to non-agricultural) which was to be granted by government authorities – which Clearsky had diligently pursued and could not be granted for reasons beyond the control of Clearsky. Interestingly, under the Impugned Order, KERC itself arrived at the conclusion that there was a delay in grant of land conversion. However, it completely failed to take the same to its logical sequitur and erroneously disallowed Clearsky's petition.
Issue at hand
- Whether a Project which has received a CEIG certificate within the original SCOD contemplated under the PPA can be held accountable for the delaying the commissioning and especially if the formal COD certificate was held up due to delay by statutory authorities?
Decision of the Tribunal
- APTEL has upheld the significance of the CEIG certificate, which evidences completion of all works associated with the power project and held that Clearsky's project was complete before the SCOD under the PPA and criticized the arbitrary decision of KERC to reduce the tariff payable to Clearsky.
- The judgment details the principles for calculation of the SCOD and reckons the effective date to be the date on which PPA is approved by the Appropriate Commission.
The APTEL judgment provides much needed relief to micro enterprises who have ventured into the power sector by setting up small projects under the Farmers' Scheme of the Government of Karnataka.
The judgment provides an impetus for generators all over the country as it has laid down that the developers cannot be penalized for delay in commissioning of the project due to events beyond their reasonable control, more particularly on account of lethargic approach of Governmental instrumentalities.
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