CERC Directs SECI To Resolve GST Compensation Dispute In Renewable Energy Sector

The Central Electricity Regulatory Commission (CERC) has issued an order in the petition, which concerns a dispute between Solitaire Powertech Private Limited and the Solar Energy Corporation of India (SECI) regarding the carrying cost of additional capital expenditure due to the introduction of the Goods and Services Tax (GST). The petitioner sought relief, arguing that the introduction of GST should qualify as a “Change in Law” under the Power Purchase Agreement (PPA), entitling them to compensation.

The petitioner had previously approached the commission in petition, seeking recognition of GST as a Change in Law event and compensation for increased capital and operational expenses. The commission had ruled in favor of the petitioner in August 2022, directing SECI to pay the additional costs in the form of monthly annuity payments over 13 years at a discounting rate of 10.41%. However, Solitaire Powertech later claimed that SECI had miscalculated the annuity amount, leading to an underpayment. They argued that they were entitled to a higher monthly annuity payment and additional carrying costs.

SECI opposed the petition, stating that the claims were barred by the principle of res judicata, as the issue had already been decided in a previous order. SECI maintained that it had followed the reconciliation process mandated by the commission and had paid the amounts as per the previous orders. The commission also considered arguments regarding whether the petitioner had already accepted SECI’s reconciliation, limiting their right to further claims.

After reviewing submissions from both parties, the commission ruled that the matter raised in the new petition was distinct from the earlier case and was therefore not barred by res judicata. It acknowledged that there was a dispute regarding the correct calculation of annuity payments and found that the petitioner had the right to seek clarification and rectification. The commission directed SECI to make the necessary adjustments and ensure that the petitioner receives the correct annuity amount, including the applicable carrying cost.

This order highlights the complexities surrounding Change in Law claims in the renewable energy sector and the importance of accurate financial reconciliation between power producers and intermediaries like SECI. It also reinforces the need for clear methodologies in compensating developers for unforeseen regulatory changes affecting project costs.