APTEL Upholds KERC Order, Dismisses Appeal On Reduced Solar Rooftop Tariffs In Karnataka

The Appellate Tribunal for Electricity (APTEL) has dismissed an appeal filed by solar power developers against the Karnataka Electricity Regulatory Commission (KERC) over reduced tariffs for rooftop solar projects in Karnataka. The case, Appeal No. 104 of 2018, focused on whether developers were entitled to an earlier, higher tariff despite delays in commissioning their projects.

The dispute began with a 2013 order issued by the Karnataka Electricity Regulatory Commission (KERC), which fixed a tariff of ₹9.56 per unit to promote Solar Roof Top Photovoltaic (SRTP) projects in the state. Based on this attractive rate, the developers entered into Power Purchase Agreements (PPAs) in 2015 with the Bangalore Electricity Supply Company Ltd. (BESCOM) to set up rooftop solar projects.

Under the agreements, the projects were required to be commissioned within 180 days. However, the developers failed to complete the installations within the stipulated time. Although BESCOM initially granted extensions, the situation changed after an advisory from the Commission. The advisory stated that extensions should not be granted for projects linked to the higher 2013 tariff. Following this, BESCOM issued termination notices to the developers in late 2016 and early 2017.

In November 2017, KERC introduced a new order to address widespread delays in rooftop solar projects across the state. The order provided a relief mechanism for developers whose PPAs had been cancelled due to delays. It allowed them to commission their projects and connect to the grid, but at a reduced tariff. Depending on the circumstances, the applicable rate would either be the 2016 tariff or the Average Power Purchase Cost (APPC) rate of ₹3.57 per unit.

The developers challenged this 2017 order before the Appellate Tribunal for Electricity (APTEL). They argued that the sharp reduction in tariffs was arbitrary and violated principles of natural justice. They also claimed that the Commission had not followed the proper procedure under the Electricity Act while issuing the order. According to them, since BESCOM had earlier granted time extensions, they should have been allowed to receive the original tariff of ₹9.56 per unit.

The Tribunal, comprising Technical Member and Judicial Member, rejected these arguments. It noted that the developers had not challenged the termination of their original PPAs. Therefore, even if the 2017 order was set aside, their contracts would still remain terminated. The Tribunal also observed that the developers had signed fresh PPAs in December 2017 at the reduced tariff.

In its judgment, the Tribunal clarified that the 2017 order was not a fresh tariff determination but a beneficial measure aimed at providing relief to struggling developers. It stated that allowing delayed projects to operate at a lower tariff was in the public interest, as it prevented wastage of solar energy and protected investments already made. Finding no legal error in KERC’s approach, the Tribunal dismissed the appeal.