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The Andhra Pradesh Electricity Regulatory Commission (APERC) passed an order on 10 July 2025 regarding a petition filed by the Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL). The petition sought approval for a continuation agreement signed with the National Aluminium Company Limited (NALCO) for the purchase of power from NALCO’s 50.4 MW wind power plant at Gandikota in YSR Kadapa District. The original Power Purchase Agreement (PPA), signed on 22 December 2012, had expired on 29 December 2022. APSPDCL requested to renew the agreement for another 15 years at a tariff of ₹2.55 per unit with a 3% annual escalation and proposed that Renewable Energy Certificate (REC) benefits continue to accrue to NALCO.
APERC held hearings and invited objections. Two objectors raised concerns. They questioned the necessity of purchasing power from NALCO’s plant, pointing out a 14-month delay in signing a new agreement and alleging that APSPDCL already had sufficient renewable sources to meet its obligations. They also criticized the lack of transparency in APSPDCL’s petition and suggested that NALCO had already recovered its capital cost and was poised to earn windfall profits. The objectors further requested that the REC benefits should be assigned to APSPDCL instead of NALCO, as the former was the obligated entity.
APSPDCL responded by citing recent mandates from the Ministry of Power that require higher renewable consumption targets, rising to 33.01% by FY 2025-26, which are much higher than earlier requirements. They argued that the 50.4 MW wind power project is necessary to meet these increased targets. They also defended the tariff as competitive and consistent with the costs of other power procurement sources. APSPDCL confirmed that the tariff and REC allocation were subject to the Commission’s final decision.
After examining all objections, data, and applicable regulations, APERC analyzed the situation. It concluded that DISCOMs would experience power shortages in coming years, especially during peak hours, and that existing and upcoming renewable projects would not be sufficient to meet future targets. Therefore, APERC confirmed the necessity of power from NALCO’s project.
The Commission agreed that the REC benefits should not accrue to NALCO since the capital costs of the project had likely been recovered, and retaining REC benefits would not be in consumer interest. APERC instructed APSPDCL to amend the PPA to ensure REC benefits are retained by APSPDCL.
Regarding the tariff, APERC determined that ₹2.55 per unit with 3% escalation was not justified without supporting rationale. Using methodology aligned with CERC regulations, the Commission independently calculated a levelized tariff of ₹2.49 per unit for the 15-year term starting from 1 August 2025. This tariff accounts for factors such as capital cost, depreciation, return on equity, interest on debt, and operation and maintenance costs.
Finally, APERC approved the PPA subject to conditions: the revised tariff of ₹2.49 per unit, REC benefits to go to APSPDCL, APSPDCL to have the first right of refusal post-15 years, and compliance with applicable Commission rules. APSPDCL was directed to submit the amended PPA for final approval within 30 days.
