NTPC Green Energy Seeks Reimbursement Amid Regulatory Changes In Renewable Energy Sector

NTPC Green Energy Limited (NGEL) recently filed a petition seeking reimbursement of scheduling and forecasting charges under the Power Purchase Agreement (PPA) dated March 31, 2016, related to a 260 MW solar PV power project in Bhadla-II, District Jodhpur, Rajasthan. NGEL, a wholly-owned subsidiary of NTPC Limited, argued that a change in law occurred with the notification of the RERC Forecasting, Scheduling, Deviation Settlement, and Related Matters of Solar and Wind Generation Sources Regulations, 2017 (RERC F&S DSM Regulations, 2017) dated September 14, 2017.

The PPA, signed on March 31, 2016, outlined a levelized tariff of ₹5 per kWh for the power generated by the project. NGEL engaged a Qualified Coordinating Agency (QCA) as mandated by the RERC F&S DSM Regulations, 2017, and raised invoices for scheduling and forecasting charges. However, the distribution companies (DISCOMS) contested these charges, leading to a dispute.

NGEL argued that the change in the law regarding scheduling charges wasn’t anticipated during the PPA signing. The petition emphasized that before the RERC F&S DSM Regulations, 2017, no additional cost was imposed on the generator for scheduling obligations. NGEL estimated the impact of this change in law on its expenses related to forecasting and scheduling charges until May 2022 to be ₹43.69 lakhs.

NGEL also highlighted its attempts to persuade Rajasthan DISCOMS (JVVNL, AVVNL, and JdVVNL) to reimburse the charges, citing the regulatory provisions in the PPA. However, DISCOMS maintained that the responsibility for forecasting lies with the scheduling and dispatch provider (SPD), and the charges are not payable by them.

During the hearing, NGEL stressed the jurisdiction of the Central Commission, stating that a previous order in a similar matter had established that disputes involving wholly-owned subsidiaries of central generating companies fall under the exclusive jurisdiction of the Central Commission.

NGEL presented evidence, including letters and invoices, to support its claim that DISCOMS was aware of the transactions. DISCOMS, in response, never contested the validity of the transactions but insisted that they were not obligated to pay.

The Commission, after careful consideration, determined that the dispute fell within its jurisdiction under the Electricity Act, 2003. It noted that the PPA’s ‘Change in Law’ provision covered events like the enactment of regulations post the PPA’s effective date. The Commission found that the RERC F&S DSM Regulations, 2017, and the F&S DSM Procedures, 2017, constituted a ‘Change in Law’ under the PPA. The Commission ruled in favor of NGEL, directing DISCOMS to reimburse the scheduling and forecasting charges after verifying NGEL’s payments to the QCA. The decision was based on the Commission’s interpretation of the PPA, its terms, and the impact of the regulatory changes on NGEL’s expenses. The case highlighted the evolving landscape of regulations affecting the renewable energy sector and the need for clear mechanisms to address associated costs within existing agreements.

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