UERC Rejects UPCL Plea On Earlier BESS Benchmark Charges, Directs Tariff Adoption Under Section 63 In Uttarakhand

The Uttarakhand Electricity Regulatory Commission (UERC) has dismissed a petition filed by Uttarakhand Power Corporation Limited (UPCL) seeking approval to execute agreements for Battery Energy Storage System (BESS) projects at an earlier benchmark capacity charge. The commission ruled that UPCL was not entitled to the regulatory relief it had requested and directed the utility to follow the tariff adoption process under the Electricity Act, 2003.

The order was passed by a bench comprising Chairman M.L. Prasad, Member (Law) Anurag Sharma, and Member (Technical) Prabhat Kishor Dimri.

The dispute relates to UPCL’s competitive bidding process launched in February 2026 for the procurement of 100 MW/250 MWh of standalone BESS capacity under the Ministry of Power’s Viability Gap Funding (VGF) scheme. At the time the tender was issued, the benchmark capacity charge approved by the UERC was ₹3,96,747 per MW per month, as determined in January 2026.

Following the completion of technical and financial bid evaluations, UPCL issued Letters of Award (LoAs) to the successful bidders on June 1, 2026. However, just three days later, on June 4, 2026, the commission issued a new order revising the benchmark capacity charge for standalone BESS projects to ₹2,59,244 per MW per month for the 2026–27 financial year.

UPCL approached the commission under Section 86(1)(b) of the Electricity Act, 2003, requesting permission to execute the agreements using the earlier benchmark rate. The utility argued that applying the revised benchmark after the bidding process had been completed would disrupt commercial expectations, create the possibility of contractual disputes, and put the central government’s VGF support for the projects at risk.

To support its request, UPCL relied on Regulation 53 of the Renewable Energy Regulations, 2023, which provides the commission with the power to remove difficulties, as well as Regulation 59 of the Conduct of Business Regulations, 2014, concerning the commission’s inherent powers.

After examining the matter, the UERC rejected these arguments. The commission stated that Regulation 53 is intended only to address difficulties related to interpreting or implementing the regulations themselves and cannot be used to alter or bypass statutory provisions. Referring to decisions of the Appellate Tribunal for Electricity (APTEL), the commission emphasized that the “power to remove difficulties” cannot be invoked to modify existing regulations.

The commission also held that Regulation 59 could not be used to provide relief in this case. It observed that inherent powers are meant to prevent abuse of the regulatory process or address exceptional situations, not to remedy issues arising from a party’s own actions. The bench noted that UPCL had participated in the benchmark cost review proceedings during May 2026 but did not inform the commission that its tender process had already reached an advanced stage. As a result, the commission concluded that UPCL could not seek equitable relief for a situation caused by its own lack of disclosure.

Although the petition was dismissed, the commission clarified that the revised benchmark capacity charge of ₹2,59,244 per MW per month is only a generic ceiling for standard BESS projects and does not automatically apply to projects implemented under the central VGF scheme. Since VGF-supported BESS projects differ in terms of duration, location, and technical configuration, the commission stated that their tariffs must be determined through competitive bidding and submitted for approval under Section 63 of the Electricity Act, 2003. Accordingly, the UERC directed UPCL to approach the commission for tariff adoption after completing the competitive bidding process.