APERC Resolves Financial Dispute Between Solar Companies And Southern Power Distribution Company

Posted On - 3 July, 2024 • By - King Stubb & Kasiva

Summary

The Andhra Pradesh Electricity Regulatory Commission (APERC) has successfully mediated and resolved a significant financial dispute between a group of six solar power companies and the Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL).[1] The dispute, which stemmed from disagreements over payments, deductions, and late payment surcharges related to Power Purchase Agreements (PPAs) dated December 5, 2014, was amicably settled through a series of negotiations and compromises facilitated by the APERC.

Case Timeline

  • December 5, 2014: Power Purchase Agreements (PPAs) are established between six solar companies and APSPDCL.
  • Until February 28, 2023: Disputes arise concerning payments, deductions for excess DC capacity, and late payment surcharges.
  • April 12, 2024: The General Manager of PP&S and APPCC proposes a structured payment plan to resolve the dispute.
  • April 16, 2024: Solar companies provide undertakings accepting the proposed payment plan with certain conditions.
  • November 2023: Additional solar panels installed post-commissioning are removed.
  • June 19, 2024: The APERC issues a final order resolving the dispute based on the mutual agreement reached between the parties.

Issues Raised

The core issues in the dispute were:

  • Non-payment of dues: The solar companies claimed that APSPDCL had not paid the outstanding principal amount of Rs. 333,10,15,831, which included deductions for excess DC capacity.
  • Deductions for excess DC capacity: APSPDCL had made deductions from the solar companies’ tariff bills due to the installation of excess DC capacity. The solar companies disputed these deductions, amounting to Rs. 2,11,19,74,429.
  • Late payment surcharges: The solar companies sought late payment surcharges of Rs. 1,37,14,39,835 on the outstanding amounts.

Appellant’s Arguments

The solar companies argued that they were entitled to the full outstanding amount without any deductions for excess DC capacity. They also asserted their right to receive late payment surcharges on the unpaid amounts as per the terms of the PPAs.

Respondent’s Arguments

APSPDCL defended the deductions made for excess DC capacity, claiming that they were in accordance with the provisions of the PPAs. Initially, they resisted the payment of late payment surcharges.

Order

The APERC’s final order, based on the consensus reached between the parties, included the following key points:

  • Payment of withheld amounts (pre-CoD): APSPDCL is to pay the withheld amounts for panels installed before the commissioning of the plants, along with 50% of the late payment surcharges, in six equal monthly installments.
  • Payment for additional panels (post-CoD): The withheld amount for additional panels installed after the commissioning date (up to May 4, 2023) will be paid in 12 equal monthly installments without any late payment surcharges.

Analysis

The resolution of this dispute through a mutually agreed-upon settlement is a testament to the effectiveness of the APERC as a regulatory body in the energy sector. The APERC’s intervention facilitated a compromise that addressed the concerns of both the solar companies and the distribution company.

The solar companies agreed to remove the additional panels installed post-CoD, and in return, APSPDCL agreed to a structured payment plan for both pre-CoD and post-CoD dues. The partial waiver of late payment surcharges further demonstrates the spirit of compromise that enabled the resolution of the dispute.

This outcome not only resolves the immediate financial issues but also fosters a more cooperative relationship between renewable energy generators and power distribution entities in Andhra Pradesh. It underscores the importance of regulatory mechanisms in ensuring the sustainable growth of the renewable energy sector in the state.

[1] https://aperc.gov.in/admin/upload/OrderinOPNo.17of2023.pdf