Appellate Tribunal Overturns AERC’s Tariff Decision For Assam 5 MW Solar Project, Orders Fresh Benchmark Review

The Appellate Tribunal for Electricity addressed an appeal by Assam Power Distribution Company Limited (APDCL) against the Assam Electricity Regulatory Commission’s (AERC) tariff determination for Suryataap Energies and Infrastructure Private Ltd.’s solar project. APDCL contested the decision to adopt capital cost benchmarks from the financial year 2015-16 instead of the year the project was commissioned, 2016-17.

The project, a 5 MW solar PV facility in Sonitpur, Assam, began commercial operations in August 2016, with power sold to APDCL under a 2014 agreement. In November 2017, AERC finalized the tariff at ₹8.78/kWh for 25 years. APDCL sought a review, arguing the benchmark should match the commissioning year. AERC maintained its stance, citing the absence of generic tariff orders and adherence to earlier capital cost norms, valid for an additional year under its regulations.

APDCL argued that the tariff must align with the project’s commissioning year to reflect accurate costs, criticizing the lack of supporting evidence for certain adjustments and deviations by AERC. Conversely, Suryataap defended the commission’s approach, highlighting local factors and regulatory flexibility allowing deviation from benchmarks.

The tribunal found AERC’s methodology flawed. While using past benchmarks was permissible for generic tariffs, it was unsuitable for project-specific tariffs. AERC’s reliance on regulations for generic tariff determination contradicted the specific case’s requirements. The tribunal emphasized that commissioning dates are pivotal for tariff determination, particularly for solar projects with fixed costs tied to installation timelines.

The tribunal set aside AERC’s decision, directing a fresh tariff determination based on market benchmarks from the relevant commissioning year. It instructed the commission to complete this reassessment within two months, ensuring compliance with established principles for fair tariff evaluation.