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The Rajasthan Electricity Regulatory Commission (RERC) has issued a significant order regarding Power Purchase Agreements (PPAs) related to 253.6 MW of wind power projects in the state. The order came in response to a petition filed by a wind energy developer, which sought a simple procedural update in its PPAs to reflect a change in the company’s name. The developer changed its name in December 2021 and approached the relevant authorities to amend the PPAs accordingly.
However, the distribution companies (Discoms) and their representative body, RUVITL, attempted to introduce a new clause in the amended PPAs. This clause would have made the generator liable to compensate the Discoms in case the annual energy output fell short of the normative Capacity Utilization Factor (CUF) set by the Commission. The generator strongly objected to the inclusion of this clause, stating that it was not part of the original agreement and should not be added under the pretext of a name change.
The wind projects in question, located in Rajasthan, were commissioned under PPAs signed between 2011 and 2015. The petitioner argued that these agreements did not contain any provisions related to minimum CUF or penalties for underperformance. Therefore, introducing such a clause now would amount to a unilateral modification of the contract, which is not legally permitted without mutual consent.
The RERC reviewed all submissions and noted that while the Discoms’ concerns about Renewable Purchase Obligation (RPO) compliance were valid, such obligations could not be retrospectively enforced on generators through changes in existing contracts. The Commission pointed out that the clause suggested by the Discoms would introduce a new financial liability for the generator, which was never part of the original contract terms.
RERC emphasized that existing agreements must be respected as per the principle of “pacta sunt servanda,” meaning contracts must be honored. Any new conditions can only be introduced in future contracts or through mutual agreement. It also added that regulatory bodies, including itself, do not have the authority to unilaterally rewrite contracts.
In its final decision, the Commission directed the Discoms to proceed with the amendment of the PPAs only to reflect the new name of the generator. The inclusion of any additional clause, especially one that was not part of the original contractual framework, was ruled out. The Commission stated that procedural updates like name changes should not be used as a means to impose new obligations.
This order reinforces the importance of contractual sanctity in the power sector and sends a clear message that changes to commercial terms in existing agreements must follow due legal process. The decision is expected to impact how future amendments to power contracts are handled, especially in the context of regulatory compliance and renewable energy targets.
