RERC Directs Discoms To Compensate Solar Plant For Change In Law Impact In Rajasthan

The Rajasthan Electricity Regulatory Commission (RERC) has issued its order in Petition No. RERC/2344/2025 filed by Benisar Solar Plant against Rajasthan Urja Vikas and IT Services Limited and Jodhpur Vidyut Vitran Nigam Limited under Sections 142 and 146 of the Electricity Act, 2003. The order was passed by Chairman Dr. Rajesh Sharma and Member Shri Hemant Kumar Jain. The petitioner had approached the commission seeking implementation of an earlier RERC order dated January 27, 2023, which had recognized increases in taxes and duties as Change in Law events. Benisar Solar Plant claimed compensation of ₹1,33,47,952.30 along with applicable interest for the additional financial burden faced during project execution.

The dispute is linked to the Central Government’s PM-KUSUM Scheme, under which the petitioner received approval to develop a 2 MW decentralized solar power project. A Power Purchase Agreement (PPA) was signed on January 28, 2021, with a levelized tariff of ₹3.14 per unit. At the time of signing the agreement, there was no Basic Customs Duty (BCD) on solar cells and modules, while the Goods and Services Tax (GST) applicable to solar equipment was 5%.

However, the tax structure changed after the execution of the agreement. In October 2021, the GST rate on solar equipment was increased from 5% to 12%. Later, from April 2022, the Government imposed a 25% Basic Customs Duty on solar cells and 40% on solar modules. According to the petitioner, these statutory changes significantly increased the project cost. Although the commission had earlier directed the distribution companies to verify and reimburse such additional expenses, the petitioner alleged that its supplementary invoices submitted in late 2024 were still pending.

The respondents opposed the compensation demand and argued that the fall in global solar module prices had offset the additional burden caused by the tax increases. They claimed that module prices had dropped by nearly 50% by 2024, and providing additional compensation would result in unjust enrichment for solar developers while increasing the burden on electricity consumers. The respondents also argued that the petitioner had failed to submit proper customs documents proving direct payment of BCD to the authorities.

After examining the matter, the commission observed that the project satisfied all conditions mentioned in its earlier order. The PPA had been executed before the prescribed cut-off date, and the plant was synchronized with the grid on September 27, 2024. RERC further noted that similar arguments regarding falling module prices and consumer interest had already been considered and rejected in a separate review petition decided in late 2025. Therefore, the commission held that the respondents could not reopen the same issues during execution proceedings due to the principle of res judicata.

The commission, however, stated that the delay in payment did not amount to deliberate or willful disobedience under Sections 142 and 146 because the respondents had raised bona fide legal arguments. As a result, no penalty was imposed on the officials concerned. RERC directed the distribution companies to verify the supplementary bills, examine auditor certifications, and release the undisputed compensation amount within 60 days. The commission also ordered that any discrepancies in billing should be communicated within 30 days, allowing the generator time to rectify them. It further clarified that a late payment surcharge would apply if the timelines are not followed.