BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR Petition No.1596/2016 In the Matter of: Petition under Section 86 (1) (f) of the Electricity Act, 2003 read with Regulation 61 of the GERC (Conduct of Business) Regulations, 2004 for adjudication of the disputes arising out of PPA dated 20.01.2011 and subsequent amendments thereto between TPL and KECPL Petitioner : M/s. Kindle Engineering and Construction Pvt. Limited Regd. Office at 616 A, Devika Tower, Nehru Place, New Delhi. Represented By : Learned Advocate Shri Hemant Sahai with Advocate Puja Priyadarshini and Ms. Minni Kataria V/s. Respondent : Torrent Power Limited Electricity House, Lal Darwaja, Ahmedabad. Represented By : Learned Advocate Ms. Deepa Chawan with Advocate Reshma Nathani and Shri Chetan Bundela CORAM: Shri Anand Kumar, Chairman Shri K. M. Shringarpure, Member Shri P. J. Thakkar, Member Date: 20/10/2018 ORDER 1. The present petition has been filed seeking following reliefs: (i) Hold and declare that deductions made by the Respondent to the tune of Rs. 18,65,53,217/- up to April 2016 is illegal; 1 (ii) Direct the Respondent to make payment to the Petitioner of the balance amount of Rs. 18,65,53,217/- on account of wrongful deductions made by it along with interest thereon as applicable under the PPA; (iii) Direct the Respondent to continue to pay the Petitioner at the rate of Rs. 10.5869/unit for energy supplied to it in terms of the agreement under the Minutes of Meeting dated 23.03.2015 after April 2016; 2. The facts of the case mentioned in the Petition are as under: 2.1. The present petition is filed for adjudication of disputes arising out of Power Purchase Agreement dated 20.01.2011 between the Respondent Torrent Power Limited and the Petitioner KECPL. 2.2. The Petitioner is a generating company as defined under Section 2(28) of the Electricity Act, 2003 and incorporated under the Companies Act, 1956 and a Special Purpose Vehicle ("SPV") created by M/s. Hindustan Clean Energy Ltd. (formerly known as M/s. Moserbaer Clean Energy Ltd.) for setting up a 50 MW solar PV power project for exclusive supply to the Respondent M/s. Torrent Power Ltd. as per PPA dated 20.01.2011 for a period of 25 years. The Respondent is a distribution licensee and supplying the electricity to the consumers in its license areas of Ahmedabad, Gandhinagar and Surat. 2.3. Government of Gujarat promulgated the Solar Power Policy, 2009 dated 06.01.2009 which encourages power generation from Solar Power Projects in the State of Gujarat by providing various incentives to the Solar Power Generators. 2 Torrent Power Limited had issued a Letter of Intent (LoI) on 23.12.2010 to M/s. Moserbaer Clean Energy Ltd. for setting up a 50 MW solar PV power project for exclusive supply to the Respondent TPL, a distribution licensee. 2.4. In the said PPA, provision regarding the tariff was as follows: - "5.2 TPL shall pay the fixed tariff mentioned hereunder for the period of 25 years for all the scheduled Energy/ Energy injected as certified in the monthly SEA by SLDC - Tariff for Solar Photovoltaic project: o Rs. 15/unit - for First 12 years and thereafter o Rs. 5/unit - from 13th year to 25th year Above tariff is as per tariff order no.2 of 2010 in the matter of Determination of tariff for Procurement of Power by the Distribution Licensees and others from Solar Energy Projects issued by GERC dated 29-01-2010 ("Tariff Order"). In case, Commissioning of Solar Power Project is delayed beyond the date of applicability of the Tariff Order, then TPL shall pay the Tariff determined by the Hon'ble GERC for Solar Projects effective on the date of Commissioning of Solar Power Project, or the abovementioned Tariff, whichever is lower." 2.5. Subsequently, a dispute arose between the parties pertaining to termination of PPA, extension of SCOD etc. for which the Petitioner had earlier filed a Petition No. 1200 of 2012 and the Commission passed the order on 18.01.2013. In compliance of the directions issued by the Commission in the said Order, the Petitioner and the Respondent entered into Supplementary PPA dated 28.02.2013 according to which the SCOD was extended by 680 days (i.e. the original SCOD was 28.01.2012 and the revised SCOD was 08.12.2013) as the 3 Commission had waived, i.e. excluded from the specified time limit and directed that milestone dates for all activities shall commence from the date of this order. Subsequently, the project site was changed from Village-Gosa, Porbandar to Solar Park, Charanka. Thereafter the Petitioner and the Respondent entered into Second Supplemental PPA dated 11.05.2013 and Third Supplemental PPA dated 17.12.2013. 2.6. The 50 MW project was finally commissioned in three parts (i) 29.993 MW on 31.03.2014 (i.e. in FY 2013-14) (ii) 15 MW on 27.01.2015 and (iii) 5 MW on 04.02.2015. There arose a dispute between the Petitioner and the Respondent on mainly 2 issues- (i) As a result of the commissioning of the plant in parts, whether the commissioning of project in parts is permitted under the PPA or should commissioning be reckoned for all purposes (including the year of applicable tariff) when entire 50 MW is commissioned and (ii) regarding the applicable tariff as a result of extension of 680 days granted by the Commission. 2.7. Both the above mentioned disputes were finally settled between the parties after exchange of various letters and recorded under the Minutes of Meeting dated 23.03.2015, whereby part commissioning of the project, and its consequential implications, was accepted by TPL. The tariff was agreed by both the parties to be the tariff for projects not availing Accelerated Depreciation as provided in the applicable tariff order during the concerned period i.e. prevailing as on the date of commissioning of that capacity. Accordingly, a weighted average tariff of Rs. 10.5869/unit was agreed w.e.f. 04.02.2015. It is pertinent to note that the said MoM clearly and unambiguously recorded the agreement between the parties on the tariff to be adopted under the PPA for supply of power. 4 2.8. After the settlement dated 23.03.2015, in light of the aforesaid understanding, KECPL started raising invoices in terms of Article 6 of the PPA based on the rate of Rs.10.5869/unit agreed between the parties without any reservation and TPL also paid the Petitioner as per the said agreement and under such invoices without demur or objection for almost a year. Thus, the Respondent acted in accordance with the understanding reached under the settlement dated 23.03.2015 and paid the agreed rates. 2.9. Subsequently the Respondent on 15.02.2016 wrote to the Petitioner averring that in light of the Hon'ble Supreme Court's judgment dated 02.02.2016 in Civil Appeal No. 1220 of 2015, the Petitioner's Project is eligible for the tariff for the project availing Accelerated Depreciation i.e. Rs. 9.64/unit for the part of the project commissioned in FY 2013-14 and Rs. 8.82/unit for the part of the project commissioned in FY 2014-15, i.e. a revised weighted average tariff of Rs. 9.311/unit instead of agreed tariff of Rs. 10.5869/unit. Accordingly, the Respondent requested the Petitioner to reimburse an amount of Rs. 15,01,00,107/- for invoices till December 2015 paid by the Respondent to the Petitioner under the Tariff Order dated 27.01.2012 read with Order dated 07.07.2014/11.07.2014 issued by the Commission. 2.10. Having agreed to a tariff for the project ‘not availing accelerated depreciation' for the present PPA, the Respondent is now trying to resile from the agreed rates on the pretext of the Hon’ble Supreme Court's judgment, which is clearly not applicable to the present Petition. The Petitioner, vide letter dated 22.02.2016 replied to and disputed the stance adopted by the Respondent in its letter dated 15.02.2016. Without responding, the Respondent not only unilaterally started 5 deducting the disputed amount of Rs. 15,01,00,107/- from the invoices raised by the Petitioner @ Rs. 10.5869/unit but also considered lower invoice amount worked out @ Rs. 9.311/unit. The Respondent, vide letters dated 11.03.2016 and 18.03.2016 reiterated the contentions raised earlier in the letter dated 15.02.2016 and continued to deduct payments due to the Petitioner. The Petitioner disputed above action of the Respondent vide letter dated 08.04.2016. Subsequently, through letter dated 02.05.2016, the Respondent raised a demand of Rs. 2,08,68,341/- on the Petitioner towards interest on the disputed excess amount paid by the Respondent. 2.11. The present dispute arose between the parties regarding payment of Rs. 15,01,00,107/- (relating to Invoices till December, 2015) deducted by the Respondent and Rs. 3,64,53,110/- being the differential amount between Rs. 10.5869/unit and Rs. 9.311/unit tariffs not paid by the Respondent for invoices raised by the Petitioner from January to April 2016 totalling to Rs. 18,65,53,217/- . Article 6.6 of the PPA clearly provides the manner in which the Respondent can raise objections in regard to invoices raised by the Petitioner. 2.12. The Respondent without adhering to such process of making payment of 85% of disputed amount as per Article 6.6 of the PPA has in fact in a high handed manner proceeded to deduct the entire amount that it now wrongly claims to have been overpaid/over invoiced.