ACME’s Legal Battle Seeking Relief From Penalties For COVID-19 Impact On 25 MW Solar Power Generation In Rajasthan

ACME Heergarh Powertech Pvt. Ltd. and ACME Solar Holdings Pvt. Ltd. (collectively referred to as “ACME”) have filed a petition under Section 86 of the Electricity Act, 2003, and their Power Purchase Agreement (PPA) dated August 21, 2019, against Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL). The petition seeks an injunction to prevent MSEDCL from levying penalties on ACME for the fiscal year 2022-23 due to a shortfall in the generation of power, which ACME attributes to Force Majeure events, specifically the COVID-19 pandemic and subsequent supply chain disruptions.

ACME’s 300 MW Solar Power Project, located in Bhadla, Rajasthan, was impacted by the pandemic, leading to a delay in the installation of the planned DC capacity. As a result, only 333.19 MW of the planned 444.75 MW was installed by the Commercial Operation Date (COD), which affected the Capacity Utilization Factor (CUF) and led to a shortfall in power generation. ACME argues that since the shortfall was due to Force Majeure events, no penalty should be imposed by MSEDCL as per Article 5.5.2 of the PPA.

However, MSEDCL rejected ACME’s claim, stating that the PPA concerns the contracted AC capacity and not the DC capacity. MSEDCL emphasized that the decision to install a lower DC capacity was ACME’s own, and the resultant shortfall in generation is not exempt from penalties. Consequently, MSEDCL recovered a compensation of ₹7,88,97,981 from ACME under the provisions of the PPA.

ACME further argued that the penalty imposed by MSEDCL was calculated incorrectly, taking into account the entire fiscal year rather than the period after the project’s commissioning. Additionally, ACME highlighted that it faced transmission constraints, leading it to opt for Short-Term Open Access (STOA) instead of Long-Term Open Access (LTOA), which it still hasn’t received. ACME also noted that similar delays in other projects were recognized as Force Majeure events, yet MSEDCL has penalized them unfairly.

The case is ongoing, with the Maharashtra Electricity Regulatory Commission (MERC) having directed ACME to file additional submissions and MSEDCL to respond. ACME maintains that the penalties should be waived, arguing that the shortfall resulted from circumstances beyond their control. The matter remains under adjudication.