Powerica Limited Granted Compensation for Change in Law Events by CERC

The Central Electricity Regulatory Commission (CERC) has granted compensation to M/s Powerica Limited for the Change in Law events resulting from alterations in the Goods and Services Tax (GST) rates. Powerica Limited, a generating company, is in the process of setting up a 50.6 MW Wind Power Project in Gujarat and has entered into a Power Purchase Agreement (PPA) with the Solar Energy Corporation of India (SECI).

Powerica Limited had filed a petition for approval of the Change in Law events and consequential compensation. The CERC has acknowledged that the petitioner is entitled to compensation and carrying costs for additional expenditure on account of the Change in Law event in terms of Article 12.2 of the PPA. This compensation is eligible from the date when the actual payments were made to the Authorities until the date of issuance of the CERC order.

The Commission has directed the contracting parties to reconcile the additional expenditure due to the introduction of the Notification No. 8/2021-Central Tax (Rate) and Notification No. 8/2021-Integrated Tax (Rate) dated 30.09.2021 by the Ministry of Finance, Government of India. The responding Uttar Pradesh Power Corporation Limited (UPPCL) is liable to pay SECI all the reconciled claims that SECI has to pay to the petitioner. However, the payment to the petitioner by SECI is not conditional upon the payment to be made by the responding UPPCL to SECI.

It is essential to note that the directions issued in the CERC order relating to compensation for the period post the Commercial Operation Date of the projects in question and towards carrying cost shall not be enforced and are subject to further orders of the Supreme Court in Civil Appeal No. 8880/2022 in Telangana Northern Power Distribution Company Ltd. & Anr. V. Parampujya Solar Energy Pvt. Ltd. & Ors, and connected matters.