Back
SUPREME COURT OF INDIA
Ajay Rastogi, C.T. Ravikumar, JJ.
M/S PENNA ELECTRICITY LIMITED (NOW M/S PIONEER POWER LIMITED) - APPELLANT(S)
VERSUS
THE TAMIL NADU ELECTRICITY BOARD & ORS. - RESPONDENT(S)
Civil Appeal No(S). 706 of 2014
Decided On : 15-03-2023
Electricity Act, 2003 – Section 86(1)(f) – Claim relating to unpaid fixed charges and underpaid variable charges – Appellant is an Independent Power Producer(IPP) operating and maintaining a Combined Cycle Gas Turbine Power Generating station and entire power generated by appellant is to be supplied to Board – There is no clause in Power Purchase Agreement (PPA ) which provides for full fixed cost, even when appellant fails to meet PLF – Appellant has not been able to demonstrate any provision either under Act, 2003 or under PPA although has not been approved by competent authority under Act, 2003 which may protect right and interest of appellant – Responsibility of fuel linkage either heavy fuel or natural gas would be that of appellant to generator – If there is any risk in supply, same has to be shared between generator and fuel supplier – There is no clause in PPA which provides for payment of full fixed cost to generator, even when generator fails to meet PLF – In given circumstances, any compensation by way of deemed generation or released heat rate due to partial loading of machine, arising due to shortage to fuel supply which is sole responsibility of appellant, is not applicable as per amended PPA – Furthermore, there is no provision for compensation by way of deemed generation or partial norms due to operation of power plant at partial load due to shortage of fuel in Central Government’s Tariff Regulations, 2004 which admittedly were in force when agreement was entered into between parties – In absence of there being any provision for compensation for capacity charges and variable charges due to fact that plant was not able to maintain normative availability/PLF on account of shortage of fuel in terms of Central Government’s Tariff Regulations, 2004, at least respondent Board cannot be said to be at fault – Finding returned by Tribunal in impugned judgment upheld. (Paras 15, 16, 18, 20, 21, 22 and 23)
Facts of the case:
Instant appeal has been filed under Section 125 of Electricity Act, 2003 assailing the judgment and order of the Appellate Tribunal for Electricity dismissing the appeal filed at the instance of present appellant.
Findings of Court:
No clause of the PPA has been pointed out indicating if there is a short supply of gas due to diversion of gas to other generating station of the Board, the respondent Board has to indemnify the appellant.
Result : Appeal dismissed.
JUDGMENT :
Rastogi, J.
1. The instant appeal has been filed under Section 125 of the Electricity Act, 2003(hereinafter being referred to as the “Act 2003”) assailing the judgment and order of the Appellate Tribunal for Electricity dismissing the appeal filed at the instance of the present appellant.
2. The appellant initially filed a petition under Section 86(1)(f) of the Act, 2003 and sought the following reliefs:
(a) direct the Respondent to make the payment of Rs.25.63 Crores towards fixed charges and Rs.8.10 Crores towards payment due on the actual variable charges payable in respect of the power generated and availed for 153.26 millions unit during the period 29.10.2005 to 30.06.2006 to the Petitioner.
(b) direct the Respondents to make the payment to the Petitioner of the sum of Rs.18.06 Crores towards under recovered fixed charges in respect of operations of the generating station of the Petitioner for the period 01.07.2006 to 15.06.2009.
(c) direct the Respondents to make the payment to the Petitioner of the sum of Rs.12.77 crores towards under recovered additional cost of generation (variable charges) in respect of operations of generating Station of the Petitioner for the period 01.07.2006 to 15.06.2009.
(d) direct the respondent to take immediate decisions on the use of Naphtha or any other compatible fuel as alternate/ supplemental fuel to increase and maintain the PLF of the plant as contemplated in the amending PPA dated 25.08.2004 in future thereby enabling the plant being operated at optional level so as to ensure the advantage to the Respondent and also the assured return to the Petitioner. The permission to use of the Naphtha/other compatible fuel should also contemplate dispatching the plant under merit order under gas based tariff only. If the Respondent desires otherwise, the Petitioner should be assured of the fixed charges.
(e) For any reason if the Respondent were not to consider any or all of the relief claimed above by the Petitioner, to direct the Respondent to make the payments due to the Petitioner as in prayer (a), (b) and (c) above and relieve the Petitioner from the obligations of the amendment PPA dated 25.08.2004.
3. The Tamil Nadu Electricity Regulatory Commission thereby disposed of the petition by order dated 30th December 2011, rejecting the claim of the appellant relating to unpaid fixed charges of Rs.18.06 under Combined Cycle Operation as well as the claim of underpaid variable charges of Rs. 12.77 crores under Combined Cycle Operation for the period between 1st July, 2006 to 15th June, 2009.
4. This came to be challenged by the appellant in appeal before the Appellate Tribunal for Electricity(hereinafter being referred to as the “Tribunal”). After the matter came to be heard, taking into consideration the material on record, the Tribunal returned a finding in paras 35, 36 and 38(1) and (2), and dismissed the appeal under the impugned judgment. The relevant paras are as under:
“35. We find that there is no provision for compensation for capacity charges and variable charges due to the fact that the plant was not able to maintain the normative availability/Plant Load Factor on account of shortage of fuel in the Central Commission’s Tariff Regulations, 2004 which were in vogue when the amended PPA was entered into between the parties or in the Sate Commission’s Tariff Regulations, 2005. Admittedly, the State Commission’s Tariff Regulations were made effective subsequent to the signing of the PPA. The State Commission could not intervene in allowing amendment in the provisions of the PPA in this regard which were voluntarily agreed by both the parties and which are not in contravention to any provision of the Act or Rules or the Regulations.
36. Therefore, there is no infirmity in the findings of the State Commission in not agreeing to interfere with the provisions of the PPA declaring the PPA
Claim relating to unpaid fixed charges and underpaid variable charges – If there is any risk in supply, same has to be shared between generator and fuel supplier.
The main legal point established in the judgment is that the capacity declaration based on RLNG could be done unilaterally, unencumbered by the requirement of the appellant’s consent in the latter ha....
Power purchase agreements must be aligned with regulatory frameworks and cannot be enforced if unapproved, particularly regarding classifications impacting fixed charges.
The Supreme Court ruled that fixed charges must be reimbursed due to wrongful power diversion, emphasizing the contractual obligation and proportionate allocation principles under the Power Purchase ....
The court upheld that coal supply from power generation must be allocated equitably among all electricity distribution companies, as mandated by regulatory guidelines, rejecting attempts to prioritiz....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
