GERC Reviews Petition On Inclusion Of Interest And Carrying Costs In Tariff Calculation For GUVNL Project

A review petition was filed by Gujarat Urja Vikas Nigam Limited (GUVNL) against an earlier order by the Gujarat Electricity Regulatory Commission (GERC) in Petition No. 1941 of 2021. The petition sought a review under relevant sections of the Civil Procedure Code and GERC’s regulations, arguing errors in the earlier decision related to the inclusion of interest or carrying costs in the project cost. The earlier order had allowed these costs as part of a tariff calculation after recognizing a safeguard duty as a “Change in Law” event.

The counsel for GUVNL contended that the carrying cost allowance contradicted the terms of the Power Purchase Agreement (PPA). It was argued that the PPA’s formula for tariff adjustments does not permit the inclusion of interest or carrying costs, which is essential in cases involving safeguard duties. Further, the commission had relied on a judgment from Appeal No. 256 of 2019 by the Appellate Tribunal for Electricity (APTEL), which, according to GUVNL, was not applicable due to differences in the PPA clauses between the two cases. Reference was made to an earlier APTEL judgment in Appeal No. 210 of 2017, which emphasized that carrying costs could only be allowed when explicitly provided for in the PPA. GUVNL’s counsel highlighted various legal precedents and judgments to support their argument for a review.

On the other hand, the respondent, Juniper Green Sigma Pvt. Ltd., argued that their invoices were raised following the commission’s earlier order, which allowed interest and carrying costs. They pointed out that GUVNL had made partial payments but excluded the interest component, despite the commission’s decision supporting it.

The commission acknowledged the detailed arguments presented by both parties and allowed additional submissions to be filed within a week. It deferred the next hearing to November 28, 2024, to address the matter further. This decision underscores the complex interplay between regulatory frameworks, contractual agreements, and judicial precedents in determining fair compensation in the energy sector.