CERC Rejects Wind Generator’s Plea Of Waiver Under LTA Agreement On Account Of Change In Law & Force Majeure Event

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In a recent order Central Electricity Regulatory Commission (CERC) rejected plea of wind power developer (WPD), Sprng Renewable Energy Pvt Ltd an 100% subsidiary of Sprng Energy Pvt Ltd (SEPL), seeking waiver of transmission charges, opening of letter of credit (LC) for PoC charges and rejection of the default notice sent by central transmission utility (CTU) on account of force majeure & change in law event occurred during commissioning of 300MW wind energy project under SECI’s 2000MW wind power project (Tranche-IV) tender. In the petition, respondents were Central Transmission Utility Of India Limited (CTUIL) and Solar Energy Corporation India Ltd (SECI). 

On dated 05.02.2018, Sprng Energy Pvt Ltd (SEPL) allotted 300MW of wind capacity under SECI’s 2000MW RFS. Letter of award (LoA) for the project was issued on 01.06.2018. Subsequently power purchase agreement (PPA) was signed with an effective date from 30.08.2018. Accordingly, the initial schedule commissioning date (SCOD) turned out to be 29.02.2020 after 18 months from the effective date of PPA. Further petitioner applied to CTU for ISTS connectivity & long term access (LTA) for evacuation of 300MW wind power. Stage-I & Stage-II connectivity at Pugalur (existing) ISTS substation was granted by CTU from effective date of 12.07.2018 and 31.10.2019 respectively. Subsequently transmission service agreement (TSA) was signed between petitioner and CTU. Long Term Access (LTA) was granted by CTU to the petitioner from 30.11.2019 till 29.11. 2044. Petitioner submitted a bank guarantee of Rs 5Cr for transmission agreement. 

Sprng Energy Pvt Ltd (SEPL) requested repeated extension of scheduled commissioning date (SCOD) on account of various challenges and impediments which were out of responsible control of the petitioner. According to petitioner such events which caused delay in commissioning of projects, should come under change in law and force majeure events. The events are given below.

I. Introduction of the Tamil Nadu Combined Development and Building Rules 2019 (“TNCDB Rules”) by the Government of Tamil Nadu on 04.02.2019.

ii. Tamil Nadu Town and Country Planning Act, 1971 (Conversion of Agricultural Land to Non-Agricultural Land – NA Conversion).

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iii.Land Ceiling Approval under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961.

On account of the above constraints, petitioner requested extension of SCOD to SECI for 300MW wind power project. After analyzing all constraints and relevant notifications issued by gov of India/ MNRE , SECI extended SCOD of the project to 13.07.2021. 

In the meantime, CTU issued following notices to the petitioner

I. Vide letter dated 11.07.2019 intimating petitioner to open a letter of credit (LC) in favor of PGCIL towards payment security mechanism of Rs. 1698.2 lakh for PoC charges to period of April 2019 to June 2019.

Ii. Vide letter dated 05.11.2019, advised petitioner to submit certain documents on account of waiver of transmission charges and losses for the use of the ISTS network in line with the 6th amendment to the sharing regulation. CTU states that the LTA for the 300MW project to be operationalized from 30.11.2019. 

On account of the above context, the petitioner prayed to the central commission the following prayers.

a) Admit the instant Petition and list the same on an urgent basis; 

b) Quash the Default Notice issued by the CTU and the related correspondence in relation to opening of the Letter of Credit for PoC charges and operationalization of LTA.

c) Direct that the operationalization of connectivity and LTA and related obligations to provide any payment security mechanisms be deferred and aligned with the Anticipated SCOD under the PPA.

d) Direct CTU to operationalize the connectivity and LTA in phases corresponding to the commissioned Project capacity as per the terms of the RFS and PPA.

e) Direct that no liability shall be attributed to the Petitioner for the unutilized LTA capacity on account of the Change in Law events coupled with illustrated events of force majeure and further direct that the Petitioner is not obliged to pay transmission charges or open the letter of credit including for any part capacity that could not get commissioned by 30.11.2019. 

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f) Direct CTU to not take any coercive measures against the Petitioner and maintain status quo with respect to the rights and obligations of the Petitioner under the Transmission Agreement and LTAA, during the pendency of the instant Petition.

g) Grant an exemption from filing duly affirmed affidavit in view of the prevailing lockdown in the country on account of the outbreak of COVID-19. 

h) Pass such other order(s) and/or direction(s) as this Hon‟ble Commission may deem just and proper in the facts and circumstances of the case.

Commission’s analysis & decision :

On hearing prayers and submissions from petitioners & respondents, the commission simplified the major issues arising from the petition for due consideration as given below.

SCOD of Generation Project as per PPA: 29.02.2020.

Extended SCOD of Generation Project, if Any: 13.07.2021.

Actual COD of Generation Project: 

28.03.2021 (60 MW)

01.04.2021 (93 MW)

05.07.2021 (39 MW)

14.07.2021 (36 MW)

21.08.2021 (12 MW)

05.09.2021 (15 MW)

14.10.2021 (12 MW)

24.10.2021 (12 MW)

31.10.2021 (21 MW)

Start date of Connectivity & LTA: 31.10.2019 & 30.11.2019.

Status of LTA (operational/relinquished, in part or full): Operationalized w.e.f. 30.11.2019 .

Whether CTUIL raised bill during the period of mismatch between COD of Generation & ATS: Yes (Billed Amount Rs.6.48 Cr)

Issue A.What shall be the date of commencement of LTA of the petitioner?

As per the signed LTA agreement, CTU opened LTA for 300MW wind capacity from 30.11.2019. Commission noted that LTA agreement has no clause with respect to date from which supply under PPA is anticipated or alignment of such date with LTA start date. The Commission further observed that PPA & LTA agreements are entirely different and distant agreements. Thus petitioner’s prayer for requirement of LTA start date with extended SCOD is rejected.

Issue B. Whether the Petitioner can claim any relief on account of Force Majeure and Change in law events faced by the Project as claimed by the Petitioner? 

Commission observed petitioner did not claim any of the time extension based on change in law or force majeure event in terms of signed PPA clauses. SECI allowed time extension of commissioning date based on different government of India & MNRE notification. Thus in view of the fact that the petitioner never invoked the provision of  Force Majeure or Change in law event, petitioner can not claim any relief on account of Force Majeure event. 

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Issue C. What shall be the liability of the petitioner for payment of transmission charges for the period before COD of its Project? 

Commission observed that as per this Regulation, waiver from payment of transmission charges and losses is available for generation based on solar and wind power resources for a period of 25 years from the date of commercial commissioning date. There is no provision for exemption from transmission charges and losses for generation based on solar or wind power resources before the date of commercial operation of such generation projects.Therefore the regulation clearly states that till the generating station has achieved commercial operation, the responsibility to pay transmission charges shall be of the generator. Accordingly Petitioner shall be liable to pay transmission charges for the delay of its project in terms of the 2010 Sharing regulations and the 2020 Sharing regulations for the respective applicable period. 

Further commission observed that as the petitioner has already achieved the COD of its project for the full capacity and is availing the waiver of transmission charges, any specific direction on opening of LC is not required.

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