Case Note & Summary
The petitioner, a solar power developer, challenged an order of the Karnataka Electricity Regulatory Commission (KERC) that denied a higher tariff by holding that the commercial operation date was the date of actual electricity injection rather than the date of the commissioning certificate. The Government of Karnataka had invited tenders for solar power generation, and the petitioner was allotted a 2 MW plant under a farmer's scheme. A Power Purchase Agreement (PPA) was executed with BESCOM, fixing the scheduled commissioning date as 1 January 2017. Due to technical unsuitability of the original site, the petitioner sought and obtained permission to shift the project to Challakere, leading to a cabinet decision revising the tariff to Rs.6.51 per unit and extending the deadline by six months. A supplementary PPA was signed, and the plant was commissioned on 1 July 2017, as certified by statutory authorities. BESCOM and KERC, however, contended that no electricity flowed until 7 July 2017, so the applicable generic tariff was only Rs.4.36 per unit. The petitioner argued that the PPA defined commercial operation date as the date the project is available for commercial operation as certified, without requiring actual injection, and that the delay in shifting was due to force majeure. The KERC dismissed the petitioner's claim. In the writ petition, the petitioner relied on a Supreme Court decision which held that objective injection data is determinative. The High Court heard the matter, reserved orders on 15 February 2023, and pronounced the order on 22 May 2023. The provided text ends during the petitioner's submissions, leaving the final decision unstated.
Headnote
A) Electricity Law - Tariff Determination - Commercial Operation Date - Power Purchase Agreement, Article 1.1(vii) - The dispute concerned the commissioning date of a solar power plant for tariff determination; petitioner contended that the commissioning certificate satisfied the contractual definition without need for injection, while the regulator required actual grid injection; the petitioner also raised force majeure due to delays in permission shifting; the court examined the contractual clause and considered Supreme Court precedent in Madhya Pradesh Power Management Co. Ltd. v. Dhar Wind Power Projects Pvt. Ltd. which emphasized objective injection data; due to incomplete text, the final holding is not ascertainable (Paras 1-11).
Issue of Consideration
Whether the commissioning certificate issued by BESCOM/KPTCL is sufficient to establish the commercial operation date under the Power Purchase Agreement, and whether the Karnataka Electricity Regulatory Commission erred in insisting on actual injection of power to determine the applicable tariff.
Law Points
- Commercial operation date under PPA interpreted as date project is available for commercial operation as certified by utility
- no contractual requirement of actual injection
- force majeure clause extends performance time for delays caused by events affecting the utility or force majeure events
- commissioning certificate issued by statutory authorities may suffice
- actual injection of power into grid is an objective determinant of commissioning per Supreme Court precedent
Case Details
2023 LawText (KAR) (05) 14
W.P. No. 10634 of 2021 (GM-KEB)
SHRIDHAR PRABHU (for petitioner), S. SRIRANGA, Senior Counsel for Smt. Sumana Naganand (for respondents 2 and 3)
Solvis Energie India Private Limited
State of Karnataka, Karnataka Power Transmission Corporation Limited, Bangalore Electricity Supply Company Limited
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Nature of Litigation
Writ petition challenging the order of the Karnataka Electricity Regulatory Commission that rejected the petitioner's claim to higher tariff for solar power, holding that actual injection of electricity was required for commissioning instead of merely a commissioning certificate.
Remedy Sought
Petitioner sought a writ of certiorari to set aside the KERC order dated 3 December 2019, a writ of mandamus to direct BESCOM to pay tariff at Rs.6.51 per unit from the date of commissioning, and to quash an invoice and refund penalty charges.
Filing Reason
KERC, by its order dated 3 December 2019, dismissed the petitioner's claim and held that the applicable tariff was only Rs.4.36 per unit because the plant was commissioned on 7 July 2017 when electricity was first injected, not on 1 July 2017 as claimed by the petitioner based on the commissioning certificate.
Previous Decisions
Karnataka Electricity Regulatory Commission in OP No.73/2018 dated 3 December 2019 dismissed the petitioner's claim and determined the tariff at Rs.4.36 per unit.
Issues
Whether the commissioning certificate issued by BESCOM/KPTCL is sufficient to establish the commercial operation date under the Power Purchase Agreement.
Whether the Karnataka Electricity Regulatory Commission erred in holding that actual injection of power is necessary to claim a higher tariff.
Whether force majeure events justified any delay and entitled the petitioner to the contracted tariff.
Submissions/Arguments
Commercial operation date under Article 1.1(vii) of the PPA means the date the project is available for commercial operation as certified by BESCOM/KPTCL, and there is no requirement of actual injection of power.
Once the commissioning certificate is issued by BESCOM and KPTCL, the plant is available for commercial operation, satisfying the contractual definition.
Under clause 2.5 of the PPA, if the petitioner was prevented from performing obligations due to BESCOM event of default or Force Majeure Events, the time for performance stands extended; the delay in shifting and obtaining permissions constituted force majeure.
The commissioning certificate dated 1 July 2017 was issued by the Chief Engineer (Elec), KPTCL and approved by the Chief Electrical Inspectorate, Government of Karnataka, with minutes recording that the equipment was connected and working in the presence of utility representatives.
KPTCL data sheets show the plant was commissioned in the evening of 1 July 2017; although no power was immediately injected, it was injected soon thereafter, and the respondents had notice of this.
Reliance was placed on the Supreme Court decision in Madhya Pradesh Power Management Co. Ltd. vs. Dhar Wind Power Projects Pvt. Ltd., which held that objective data of actual injection into the grid determines the commissioning date, not merely a certificate.
Judgment Excerpts
Commercial operation date under Article 1.1(vii) means the date on which the project is available for commercial operation as certified by BESCOM/KPTCL. There is no particular requirement of injection of power in terms of Article 1.1(vii).
The KERC vide its communication dated 4.10.2017 was of the opinion that the commissioning had not occurred on 1.07.2017 since there was no injection of electricity into the grid by the petitioner.
the objective data on the record indicates that the injection of power into the grid took place on 1 April 2016. Hence, we are of the view that this should be the basis on which the claim for the entering into a PPA should be founded.
Procedural History
Government of Karnataka issued notification on 22.05.2014 for solar power generation; petitioner applied and was allotted 2 MW plant; PPA executed on 02.07.2015; scheduled commissioning date 01.01.2017; petitioner sought permission to shift site on 02.09.2015; cabinet decision on 18.01.2017 revised tariff and granted six months extension; KREDL initially refused due to capacity on 04.02.2017; State granted permission on 17.04.2017; KREDL permission on 19.04.2017; supplementary PPA on 28.04.2017 with deadline 01.07.2017; commissioning certificate issued on 01.07.2017; KERC opined on 04.10.2017 that no injection occurred; BESCOM called for documents on 07.12.2018; petitioner approached KERC in OP No.73/2018; KERC dismissed claim on 03.12.2019; petitioner filed writ petition challenging that order; High Court reserved orders on 15.02.2023 and pronounced order on 22.05.2023.
Acts & Sections
- Electricity Act, 2003: Section 31
- Constitution of India: Article 226, Article 227
