Green Energy Dispute Resolved: Solar Company Awarded Compensation For Power Supplied To Telangana Grid

Summary

The dispute centres on a 1 MW power generation unit operated by the petitioner, who faced issues extending their Long-Term Open Access (LTOA) due to the non-submission of Power Quality Test (PQT) reports and complications related to harmonics. Despite lacking an open access agreement, the petitioner continued to inject power into the grid, which the respondent (DISCOM) utilized without a formal arrangement. The petitioner sought compensation for the energy injected, attributing delays to the pandemic and highlighting shared responsibility for regulatory compliance failures.

Case Timeline

• 2016-2019: There is no clear evidence on record regarding whether yearly inspections and test reports were conducted as required by the LTOA agreement.
• September 16, 2020: The petitioner’s LTOA agreement expired, and they applied for an extension three months prior, as required.
• March 24, 2022: The petitioner continued to inject power into the grid despite not having a renewed open access agreement.
• May 6, 2024: The Commission issued its final order, directing the respondent to compensate the petitioner for the energy injected during the period without an active agreement.

Issue Raised

The central issue was whether the petitioner was entitled to compensation for the energy injected into the grid during the period when their LTOA was not renewed, given the delays and regulatory complications. The case also explored the responsibilities of both parties in ensuring compliance with the relevant regulations.

Appellant’s Arguments and Respondent’s Arguments

Appellant’s (Petitioner’s) Arguments:

• Responsibility of Notification: The petitioner argued that the nodal agency failed to inform them promptly about the requirement for necessary reports as soon as the extension application was received. This lack of timely communication contributed to delays in obtaining the required PQT reports.
• Pandemic Delays: The petitioner cited the COVID-19 pandemic as a significant factor that caused delays in complying with the regulations. The disruptions caused by the pandemic led to delays in setting right the required equipment and submitting the necessary reports.
• Non-Gratuitous Energy Injection: The petitioner maintained that the energy injected into the grid was non-gratuitous. Despite lacking a formal agreement, the respondent benefited from the energy injected by the petitioner, making it reasonable to seek compensation.
• Judicial Precedents: The petitioner referenced past judicial decisions, such as the Hon’ble ATE’s judgment in Appeal No.170 of 2012, where compensation was awarded for energy injected without a formal agreement due to the actions or inactions of the respondent.

Respondent’s (DISCOM’s) Arguments:

• Compliance Failure: The respondent argued that the petitioner failed to submit the required PQT reports and comply with harmonics regulations, which were essential for the extension of the LTOA.
• Technical Requirements: The respondent insisted that compliance with technical requirements, as stipulated by the Electricity Act, 2003, and relevant regulations, was necessary. They emphasized the importance of maintaining grid stability and ensuring proper power quality standards.
• Non-Gratuitous Claim Dispute: The respondent contested the petitioner’s claim that the energy injection was non-gratuitous. They argued that there was no formal arrangement or agreement during the period in question and that the energy injected could be considered gratuitous.

Judgment

The Commission ruled in favour of the petitioner, recognizing that both parties shared responsibility for the compliance failures and acknowledging the delays caused by the pandemic. It concluded that the energy injected into the grid by the petitioner was non-gratuitous and that the respondent benefited from this energy without a formal arrangement. Consequently, the petitioner was entitled to compensation for the energy injected from September 16, 2020, to March 24, 2022. The compensation was set at the average pooled power purchase cost as determined by the Commission for the relevant financial years. The respondent was ordered to pay this compensation within four weeks from the date of receipt of the order.

Analysis

The Commission’s decision highlights several critical aspects:

• Shared Responsibility: The ruling emphasized that both the petitioner and the respondent had roles in the compliance failures. The nodal agency’s failure to promptly communicate the requirements for LTOA extension and the petitioner’s delayed submission of the necessary reports both contributed to the issue. This shared responsibility influenced the Commission’s decision to rule in favor of the petitioner.
• Impact of the Pandemic: The COVID-19 pandemic played a significant role in causing delays in regulatory compliance. The Commission took into account the extraordinary circumstances of the pandemic, which affected the petitioner’s ability to meet regulatory requirements in a timely manner. This consideration underscores the need for flexibility and understanding in unprecedented situations.
• Principle of Non-Gratuitous Acts: The invocation of Section 70 of the Indian Contract Act, 1872, reinforced the principle that any act performed with the expectation of compensation should not be considered gratuitous, especially when the benefiting party gains monetarily. The Commission recognized that the energy injected by the petitioner was intended to be compensated, and the respondent’s utilization of this energy without payment was unjust.
• Judicial Precedents and Regulatory Compliance: The decision was consistent with past judicial rulings that emphasized fair compensation for energy injected into the grid without formal agreements. The Commission cited previous cases where compensation was awarded in similar circumstances, reinforcing the principle of fairness. Additionally, the case highlighted the importance of adhering to regulatory standards and ensuring timely communication and action by all parties involved to avoid similar disputes in the future.

The order serves as a reminder of the complexities involved in energy regulation and the need for clear communication and adherence to standards to prevent disputes. It also establishes a precedent for compensating non-gratuitous energy injections, promoting fairness in the energy sector.