APTEL Favors Solar Developer In 20 MW Tariff Dispute With GESCOM In Karnataka

Tungabhadra Solar Parks Private Limited filed an appeal against the Karnataka Electricity Regulatory Commission’s order dated 17 December 2018, which denied the company an extension of time to meet certain obligations and upheld a penalty imposed by Gulbarga Electricity Supply Company Limited (GESCOM). This dispute is rooted in the timeline and execution of a 20 MW solar project in Chikkodi Taluk, Belagavi District, Karnataka.

The appellant company was formed by Marikal Solar Parks Private Limited as a special purpose vehicle to implement one of three 20 MW solar projects awarded through a bidding process conducted by Karnataka Renewable Energy Development Limited (KREDL). Marikal was one of the successful bidders and was issued a Letter of Award (LOA) on 23 March 2016. The Power Purchase Agreement (PPA) between Tungabhadra and GESCOM was signed on 3 June 2016 and made effective from 25 May 2016. This agreement was later approved by the Commission on 7 October 2016, requiring a supplementary PPA to reflect modifications. A second supplementary PPA was executed on 10 August 2017 to formalize 7 October 2016 as the effective date.

Tungabhadra claimed that delays in the approval and execution of agreements by GESCOM led to delays in land acquisition and project implementation. GESCOM, on the other hand, argued that Tungabhadra delayed land acquisition, causing a shift in project location and subsequent non-compliance with agreed milestones. GESCOM imposed a penalty of ₹12 lakhs on Tungabhadra on 27 July 2017 for delay in fulfilling the conditions precedent.

Tungabhadra filed a petition seeking a 125-day extension from 7 October 2016 to fulfill its obligations and to cancel the penalty notice. However, the Commission rejected all reliefs and relied on an earlier order (O.P. No. 18 of 2018) to uphold GESCOM’s actions. The Commission noted the project was claimed to have been commissioned on 6 October 2017, but there was no power injection into the grid due to cloudy weather. The Commission interpreted that actual injection of power was necessary for commissioning, thus leading to the reduction of the applicable tariff from ₹5.46/kWh to ₹4.36/kWh.

Tungabhadra contested these findings, arguing that the Commission went beyond the pleadings and made observations without hearing the parties on tariff reduction and project delay. Moreover, they highlighted that the order in O.P. No. 18 of 2018, which the Commission relied on, had been overturned by the Appellate Tribunal for Electricity and upheld by the Supreme Court. According to these judgments, if the PPA was approved on 17 October 2016, the Scheduled Commissioning Date would be 17 October 2017. Therefore, commissioning on 6 October 2017 was within time.

The Tribunal agreed with Tungabhadra, ruling that the Commission’s observations were not only beyond the scope of the petition but also incorrect in light of the binding judicial precedent. The Tribunal allowed the appeal, set aside the Commission’s remarks, and permitted Tungabhadra to approach the Commission again to seek a tariff of Rs. 5.46/kWh and recover dues. The Commission has been directed to resolve the matter within four months, based on the previous rulings by the Tribunal and the Supreme Court.