APTEL Rules In Favor Of 50 MW Solar Plant, Restores Net-Off Billing Under PPA

The Appellate Tribunal for Electricity (APTEL) has ruled in favor of Renew Solar Energy (TN) Pvt. Ltd. in a major dispute over electricity billing for a 50 MW solar power plant in Madhya Pradesh. The Tribunal overturned an earlier order of the Madhya Pradesh Electricity Regulatory Commission (MPERC) and directed that the company should continue to be billed according to the terms of its Power Purchase Agreement (PPA).

The case involved the method of billing electricity that the solar power plant draws from the grid during non-solar hours, mainly at night. Renew Solar Energy operates a 50 MW solar project in Sheopur, Madhya Pradesh, under a PPA signed with Madhya Pradesh Power Management Company Limited (MPPMCL) in 2014. The agreement clearly provided that billing would be carried out on a “net-off” basis. Under this arrangement, the electricity imported from the grid is deducted from the electricity supplied to the grid, and the final bill is prepared based on the net energy.

The company stated that this billing system was followed successfully until 2016. However, MPPMCL later changed the billing method and started charging the solar developer separately for the electricity imported during non-solar hours. The utility applied the higher tariff under the Temporary HT Industrial Category, referring to Regulation 10 of the MPERC Co-generation Regulations, 2010.

MPPMCL and MPERC argued that since the solar plant does not generate electricity during the night, it should be considered to be in a “shut down” condition. They claimed that under Regulation 10, electricity consumed during a shutdown period or emergency should be billed separately at temporary commercial tariff rates instead of being adjusted under the net-off arrangement.

The APTEL bench, comprising Officiating Chairperson Seema Gupta and Judicial Member Virender Bhat, did not agree with this interpretation. The Tribunal explained that a plant can be considered to be in a shutdown state only when it is deliberately stopped or completely deactivated because of operational or mechanical reasons. In the case of a solar power plant, the absence of sunlight during the night is a natural condition and does not mean that the plant is shut down.

The Tribunal observed that the solar plant remains operational and is ready to generate electricity as soon as sunlight is available. Therefore, night-time hours cannot be treated as a shutdown period under the regulations. It also pointed out that the wording of Regulation 10, which mentions “shut down period or during other emergencies,” indicates that the rule applies only to exceptional situations and not to the normal daily operating cycle of a solar project.

APTEL also rejected earlier legal decisions cited by the respondents, stating that those cases involved different PPAs or projects supplying electricity outside the state. Since Renew Solar Energy was supplying power to the state grid under a PPA that clearly provided for net-off billing, those judgments were not applicable.

With this decision, APTEL set aside MPERC’s 2018 order and directed that Renew Solar Energy must continue to be billed on a net-off basis as specified in its PPA. The Tribunal also restrained MPPMCL from imposing separate high-tariff charges for electricity used by the plant during non-solar hours. The ruling is expected to provide greater clarity on billing arrangements for solar power projects operating under similar contractual agreements.