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The petition involves a dispute between a petitioner, Vayu (Project 1) Private Limited, and Gujarat Urja Vikas Nigam Limited (GUVNL) regarding payments and benefits related to carbon credits. The petitioner owns wind power projects and entered into Power Purchase Agreements (PPAs) with GUVNL for selling the energy generated. Under the PPA, they were required to share 25% of the proceeds from the sale of Certified Emission Reduction (CER) credits, which are part of the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change.
The core dispute arose when GUVNL deducted money from the tariff payments made to the petitioner, claiming a share of revenue from Voluntary Carbon Units (VCUs) sold under a separate carbon credit scheme managed by Verra. The petitioner contends that the agreement only applies to CDM benefits, not other voluntary carbon credit mechanisms like Verra’s VCUs, which are outside the scope of the PPAs. They assert that GUVNL’s deductions are wrongful and that the only obligation they have is to share benefits related to CERs under the CDM.
The petitioner filed the case to seek refunds of the amounts wrongfully retained by GUVNL and to stop further deductions. GUVNL, on the other hand, argues that the reference to CDM benefits in the PPA includes all forms of carbon credits, including VCUs, and that the petitioner is required to share revenue from all such schemes.
GUVNL insists that the carbon credits, whether CDM or voluntary, reduce the overall cost of wind energy generation and thus the benefits must be passed on to them, as it affects consumer tariffs. The petitioner disagrees and states that the terms of the PPA are explicit in referring only to CDM benefits, and any other voluntary schemes, like the Verra mechanism, should not be included.
Throughout the case, both parties have exchanged legal arguments regarding the interpretation of the terms in the PPA. The petitioner is seeking a refund of ₹51,84,387, which GUVNL had retained, while GUVNL maintains that the deductions are lawful under the PPA. The case is pending before the Gujarat Electricity Regulatory Commission for adjudication.
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