Wind Power Project Tariff Dispute Judgment

The Supreme Court of India has delivered a significant judgment regarding the tariff dispute in the wind power project. The case involved a dispute between the first respondent and the appellants over the applicable tariff for the project commissioned in Madhya Pradesh. Stay tuned to learn more about this crucial decision! #LegalCase #SupremeCourt #WindPower

Facts

• The Wind Power Project Policy 2012 stipulated that the purchase/sale of power would be administered by the Madhya Pradesh Electricity Regulatory Commission.
• Actual capacity successfully injected power into the grid was a criterion for issuance of the commissioning certificate.
• The first appellant informed about a unit price change from Rs 5.92 to Rs 4.78 under a subsequent Tariff Order.
• Tariff Order applied to new wind electricity generation projects commissioned after 1 April 2013 for sale within Madhya Pradesh.
• Developers were allowed to execute agreements with the Madhya Pradesh Power Management Company Limited before commissioning plants for exclusive sale of electricity for 25 years.
• The first respondent challenged letters dated 30 April 2016 and 1 February 2017 before the High Court.
• Appellants disputed the commissioning date of the project and claimed power injection into the grid started on 1 April 2016.
• The State Commission issued a Tariff Order for procurement of power from Wind Electricity Generators on 26 March 2013.
• A fresh Tariff Order was issued on 17 March 2016 which affected the tariff for projects commissioned after 1 April 2016.
• The project approval, construction completion, and readiness for commissioning were undertaken by the first respondent.
• The SLDC confirmed the status of power injected into the grid for the first respondent’s project on 2 April 2016.
• The first respondent requested a Power Purchase Agreement based on a commissioning date of 31 March 2016.
• Notification on 30 January 2012 by the Government of Madhya Pradesh laid down a policy for wind energy generation in the state.
• Final project approval was obtained for setting up 12 MWs on private land and 3 MWs on revenue land.
• The registered capacity was increased to 15 MW for the project comprising ten wind turbine generators of 1.5 MW each.
• High Court allowed the writ petition and set aside the letters of the first appellant dated 30 April 2016 and 1 February 2017.
• First appellant was directed to enter into a PPA with the first respondent for the purchase of electricity at the rate of Rs 5.92 per unit.
• After the High Court’s decision, the appellant revoked the certificate of commissioning dated 31 March 2016.
• Revocation of the commissioning certificate led to the institution of the second set of writ petitions in the High Court.
• An interim order dated 15 May 2018 stayed the revocation of the commissioning certificate.
• A review petition filed before the High Court was dismissed on 29 January 2018.

Also Read: Legal Analysis: Sheikh Noorul Hassan vs. Nahakpam Indrajit Singh – Permissibility of Subsequent Pleading in Election Petition Proceedings

Arguments

• The Tariff Order of March 2013 stipulated that it would be applicable to all new wind electric generation projects which were commissioned on or after 1 April 2013 for the sale of electricity to distribution licensees in the State.
• The Tariff Order fixed a levelized tariff of Rs 5.92 per unit for new wind energy projects to be commissioned after the issuance of the Order for a project life of 25 years.
• The crucial ingredient for determining the tariff was the actual date on which the project was commissioned.
• The Tariff Order of 17 March 2016 replaced the earlier Tariff Order and applied to all new wind electric generation projects commissioned at 00.00 hrs on 1 April 2016 or thereafter.
• The SLDC was required by the Tariff Order to submit a list of WEGs commissioned during the month of March 2016 from 00.00 hrs of 1 March 2016 to 24.00 hrs of 31 March 2016 to determine commissioning dates.
• Guidelines issued on 18 March 2016 provided a format for commissioning certificates requiring readings of WTG meters, main billing meters, and check billing meters.

Also Read: CRPF Act: Validity of Rule 27 for Compulsory Retirement – Case of Head Constable vs. CRPF

Analysis

• The actual date of commissioning determines the applicable tariff – Rs 5.92 per unit for projects commissioned before 31 March 2016 and Rs 4.78 per unit for those commissioned after 1 April 2016.
• The data from SLDC shows injection of power into the grid on 1 April 2016, indicating actual commissioning on that date.
• The certificate of commissioning issued contradicts the SLDC data, which is considered more reliable.
• Based on the SLDC data, the project was commissioned on 1 April 2016 and should be eligible for the tariff under the Tariff Order dated 17 March 2016.
• The first respondent’s genuine pursuit of the higher rate as per the earlier Tariff Order is acknowledged, although the High Court’s decision is disagreed with.
• The first respondent should not be denied the benefit of the rate set by the Tariff Order of 17 March 2016, applicable for the control period from 1 April 2016 to 31 March 2019 and for the entire 25-year life cycle.
• The guidelines mentioned in Para 3.1 do not apply to the project of the first respondent
• The first respondent’s project is an intra-State project and does not meet the specified requirements
• The guidelines mentioned came into force after the project’s initiation, making them inapplicable
• Para 3.1 outlines that the guidelines are for grid-connected Wind Power Projects with individual size of 5 MW and above at one site, with a minimum bid capacity of 25 MW for intra-State projects

Also Read: DAMEPL vs. DMRC: Curative Petition and Arbitral Award Restoration

Decision

• The second writ petition filed by the first respondent before the High Court of Madhya Pradesh will be dismissed based on the current judgment.
• No costs are awarded in this case.
• The appeals are partly allowed, and the High Court’s judgments dated 21 September 2017 and 29 January 2018 are set aside.
• Any pending applications are disposed of as well.
• The appellants are directed to process the first respondent’s application for executing a Power Purchase Agreement (PPA) from 1 April 2016.
• As a result, the first respondent is entitled to benefit from the Tariff Order dated 17 March 2016.

Case Title: MADHYA PRADESH POWER MANAGEMENT CO. LTD. DGM (COMMERCIAL) SANJEEV KHARE Vs. M/S DHAR WIND POWER PROJECTS PVT. LTD. AUTHORISED SIGNATORY ANIL MISRA

Case Number: C.A. No.-009218-009219 / 2018

Click here to read/download original judgement