CERC rejects SECI’s petition for adoption of tariff for 150MW floating solar project in UP, which is not meeting ‘composite scheme’ for generation and sale of electricity

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CERC recently passed an order that it does not have any jurisdiction to adjudicate a petition filed by SECI for the adoption of a 150MW floating solar project in UP Rihand dam.

In the present case, the petitioner is SECI and respondents are Shapoorji Pallonji Infrastructure Capital Company Pvt Ltd, Renew Solar Power Pvt Ltd, Rihand Floating Solar Pvt Ltd, Renew Solar Power Pvt Ltd, Auxo Sunlight Pvt Ltd, UPPCL (Uttar Pradesh Power Corporation Limited), UPJVNL (Uttar Pradesh Jal Vidyut Nigam Limited). 

The petitioner has made the following prayers to commission :

a. Admit the present petition.

b. Adopt the tariff discovered in the tariff based competitive bid process for the individual power projects as stated in terms and conditions contained in the PPAs with solar power developers being respondent. In addition, there will be the trading margin of INR0.07/Kwh (as mutually agreed between the parties) to be recovered from the buying utilities/ distribution company, namely, UPPCL, in terms of the PSA”.

With addition of the above prayers, SECI also approached the commission with the following issues :

  1. PPAs and PSA entered into by SECI as the nodal agency of the central government and as an inter-state trading licensee are considered as a ‘composite scheme’ – a program for the generation and sale of electricity in more than one state.
  1. Clauses in the PSA allow SECI to sell UPPCL’s allocation of solar power to third parties including any licensee. The PPAs executed with the developers state CERC as the ‘Appropriate Commission’.
  1. As per the provisions of the PSA, in the event of a bill amounting to INR 25Cr is unpaid to the extent of INR 10Cr, SECI would have the right to divert and sell UPPCL’s allocation to third parties. SECI argued that it was entitled to sell the power outside the state, and the project qualified as one under the ‘composite scheme.’

Background : On 06.09.2018 on behalf of UPPCL, SECI has issued Request for Selection (RfS) along with draft PPA & draft PSA documents for selection of Solar Power Developers for setting up 150MW (Package A,B & C of 50MW each) floating solar power plant in Rihand Dam in Uttar Pradesh.

In a reverse auction for Phase B held on Nov27,2018, Shapoorji Pallonji was awarded 50MW at the tariff of INR 3.29/Kwh.

For Phase A & C, since only single bids were received from Renew Solar Power at ₹3.31 (~$0.044)/kWh, there was no occasion for conducting an e-reverse auction. The tariff was later negotiated to ₹3.29 (~$0.043)/kWh.

SECI agreed to sell 150MW solar power to the distribution licensee, UPPCL & the same has agreed to be purchased from SECI at the rate of INR3.29/Kwh plus trading margin of INR 0.07/Kwh.

Commission Analysis :

As regard the PPA and PSA entered into by SECI with Solar power developers and UPPCL is of ‘Composite Scheme’ as per Section 79 of the Electricity act, 2003 : Commission does not persuade the SECI’s argument. The provisions of sale and purchase of power are only supplemental to the main scheme of generation and sale of power to Uttar Pradesh. The right to sell the allocation of buying entities to third parties is only a recourse envisaged to address the incidences of payment default. Thus, it does not envisage the composite scheme of generation and sale of power in more than one state as the entire capacity is tied up for sale to UPPCL within the state of UP.

In the case of CERC being defined as an “Appropriate Commission” under the PPAs with solar power developers, as SECI is selling and purchasing within a single state, it will not come under “composite scheme” of power purchase and sale. Thus, CERC will not be the “Appropriate Commission” to adjudicate in the petition. Rather the State Electricity Regulatory Commission (SERC) will be the appropriate commission where the distribution licensee will be located.

Also, SECI’s claim that in the event of a bill amounting to INR 25 Cr is unpaid to the extent of INR 10 Cr, it would have the right to divert and sell UPPCL’s allocation to third parties, only triggers when such an eventuality arises and not otherwise.

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