UPPCL Challenges UPERC’s Renewable Energy Banking Decision At APTEL Over Disputed Banking Agreements

The Uttar Pradesh Power Corporation Limited (UPPCL) and other distribution licensees in the state of Uttar Pradesh filed an appeal against the Uttar Pradesh Electricity Regulatory Commission (UPERC) concerning the impugned order passed in Petition No. 1994 of 2023. This appeal raised critical concerns regarding the validity of the UPERC’s decisions, especially concerning banking agreements for renewable energy plants.

Inox Air Products Private Limited, the second respondent in the case, had filed a petition with the UPERC, seeking directives for UPPCL to sign a banking agreement that allowed for 100% banking of energy generated by its renewable energy project. The petition also requested that UPPCL provide energy credits in its bills for the energy generated but not consumed by the facility prior to signing the banking agreement.

The primary issue highlighted by the UPERC was the restriction on the utilization of the banking facility to only 25% of the energy generated by Inox Air Products. The UPERC observed that under Regulation 31 of the 2019 Regulations, renewable energy plants were permitted to bank 100% of the energy generated, provided technical feasibility regarding evacuation was ensured. The Commission noted that the right to banking is essential for renewable energy plants due to the intermittent nature of power generation, and this right could not be restricted unilaterally by UPPCL.

UPERC further explained that the 100% banking facility must be understood in the context of the 15-minute time block, which is the fundamental energy accounting unit. The Commission also clarified that any energy banked in a 15-minute block during peak or off-peak hours would be subject to banking charges. Additionally, UPERC mandated that the total energy banked at the end of each quarter should not exceed 49% of the total energy generated, with any excess energy deemed lapsed at the end of the quarter.

The UPPCL and other appellants challenged this ruling, arguing that the provision of banking up to 100% was subject to agreement between the renewable energy generators and the distribution licensees. They contended that UPERC had misinterpreted the relevant regulations by imposing a mandatory 100% banking requirement, regardless of the lack of an agreement between the parties.

The appeal argued that the agreement for banking was a commercial decision that required mutual consent. Therefore, UPPCL maintained that it should not be forced to provide 100% banking without an explicit agreement.

On the other hand, the second respondent, Inox Air Products, asserted that the requirement for an agreement could not give the distribution licensees absolute discretion to limit the quantum of energy banked. In their view, the regulation’s purpose was to promote renewable energy generation and ensure energy banking without unnecessary restrictions.

The case revolves around the interpretation of Regulation 31 of the 2019 Regulations, particularly the provision that permits renewable energy plants to bank energy up to 100%, subject to technical feasibility. The judgment is expected to provide further clarity on the rights and obligations of renewable energy generators and distribution licensees regarding banking agreements in Uttar Pradesh.