APTEL Upholds PSPCL Tariff Reduction, Remands Payment Structure to PSERC

In a notable judgment delivered on January 8, 2026, the Appellate Tribunal for Electricity (APTEL) dismissed an appeal by Mokia Green Energy Private Limited regarding a tariff reduction and recovery demand from the Punjab State Power Corporation Ltd. (PSPCL). The dispute arose over claims of “accelerated depreciation”punjab by the solar developer, despite prior commitments to opt for normal depreciation under its Power Purchase Agreement (PPA).

The issue dates back to a 2013 Request for Proposal issued by the Punjab Electricity Development Agency (PEDA). Mokia Green Energy, which operates a 4 MW solar project in Mansa, Punjab, had secured a PPA at a tariff of ₹8.59 per unit, declaring at the time that it would not use accelerated depreciation. However, in January 2025, PSPCL reduced the tariff to ₹7.71 per unit and sought nearly ₹7.96 crore in refunds, claiming that Mokia had availed of accelerated depreciation benefits under the Income Tax Act.

Mokia Green Energy argued that the 80 percent depreciation it claimed was the normal statutory rate for solar assets under the Written Down Value method and did not constitute accelerated depreciation. The company also contended that the PPA’s “Entire Agreement” clause did not allow for tariff revisions based on previous undertakings or bidding documents.

APTEL rejected these arguments, noting that while “Accelerated Depreciation” is not strictly defined under the Income Tax Act, it is commonly used in regulatory contexts to describe higher depreciation rates as fiscal incentives. The tribunal highlighted that Mokia had admitted to claiming depreciation at 80 percent and 40 percent rates, which effectively amounted to claiming the accelerated benefit.

The tribunal also examined the PPA’s “Entire Agreement” clause and found that it explicitly incorporated the terms of the earlier Implementation Agreement. It included a clear undertaking from the company that it would not avail itself of accelerated depreciation. APTEL emphasized that the developer had provided this commitment before entering the PPA and was legally bound to honor it.

While the appeal was dismissed, APTEL acknowledged the financial burden on the developer. Mokia had stated that withholding payments by PSPCL made it impossible to service its debt of ₹60 lakhs per quarter. To address this, the tribunal remanded the matter to the Punjab State Electricity Regulatory Commission (PSERC) to determine a reasonable percentage of the monthly billing that should be paid to Mokia. This measure is intended to ensure the project remains operational while the past dues are recovered. PSERC has been instructed to decide on this payment structure within two months.

The judgment underscores the importance of adhering to contractual commitments in the renewable energy sector and highlights how regulatory authorities balance financial prudence with the operational sustainability of power projects. It also reinforces that developers must carefully consider depreciation claims and their impact on agreed tariffs.