KERC’s Ruling Empowers Solar Power Projects In Reimbursement Battle

In a significant development, the Karnataka Electricity Regulatory Commission (KERC) has given the green light to solar power projects seeking reimbursement for additional expenditures. The projects, initiated by the respondent HESCOM (Hubli Electricity Supply Company Limited), faced hurdles due to the introduction of GST laws in 2017, resulting in increased operational and maintenance (O&M) charges.

The backstory involves petitions filed against HESCOM for the reimbursement of extra costs incurred during the establishment of two solar power projects. The commission initially partially approved these petitions but disallowed certain claims related to additional expenses for goods and services after the project’s commissioning. Disputes also arose over GST impacts on O&M expenses and carrying costs.

However, following appeals by the petitioner, the commission revisited its decision and remanded the matters to be reevaluated. This move was prompted by a previous order referencing a case between Parampujya Solar Energy Private Limited and CERC, setting the stage for a fresh assessment.

During subsequent hearings, the respondent (HESCOM) requested time to file objections, citing an order from the Appellate Tribunal for Electricity. The petitioner presented minutes from meetings held between the parties, aiming to resolve issues related to additional expenditure and GST impact.

As the case progressed, the commission examined whether the petitioner should be entitled to the previously disallowed portion of additional expenditure. The commission referred to a similar case involving Parampujya Solar Energy, where the Appellate Tribunal allowed compensation for GST-related expenses post the Commissioning Date (COD). Accordingly, the commission ruled in favor of the petitioner, stating that the disallowed portion should now be granted.

The issue of carrying costs was also revisited, with the commission referencing the Parampujya case, which established a precedent for a 10% annual carrying cost on additional expenditures due to change-in-law effects. The commission upheld this principle, allowing the petitioner to claim carrying costs from the respective dates of incurring additional expenses until full payment.

Addressing the petitioner’s claim for additional expenditure due to GST on O&M expenses until March 31, 2023, the commission referred to the Parampujya case’s discussions. The commission acknowledged the petitioner’s supporting documents, including service orders and CA certificates, and allowed the claim for GST impact on O&M expenses.

In a significant move, the commission directed the petitioner to compute the carrying cost becoming due and pay the court fees accordingly. The respondent (HESCOM) was ordered to pay the approved amounts in quarterly installments. However, the commission emphasized that the reliefs granted are contingent upon the final outcome of the case pending before the Supreme Court of India. In conclusion, the commission’s decision represents a milestone for solar power projects seeking reimbursement for additional expenditures. The ruling not only addresses specific claims but also establishes a framework for future cases, drawing on precedents and legal principles. As the renewable energy sector continues to evolve, such regulatory decisions play a crucial role in shaping the industry’s landscape.

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