Tariff modifications in power purchase agreements must comply with regulatory approvals as per Section 86(1)(b) of the Act, ensuring valid determination of electricity purchase prices.

JUDGMENT :

SANJAY KUMAR, J.

1. By way of this appeal filed under Section 125 of the ELECTRICITY ACT , 2003¹[for short, ‘the Act of 2003’], M/s. KKK Hydro Power Limited, Faridabad, Haryana, calls in question the judgment dated 17.10.2014 passed by the Appellate Tribunal for Electricity, New Delhi²[for short, ‘the APTEL’], in Appeal No. 198 of 2013. In turn, Appeal No. 198 of 2013 was also filed by M/s. KKK Hydro Power Limited, the appellant herein, against the order dated 05.07.2013 of the Himachal Pradesh Electricity Regulatory Commission³[for short, ‘the Commission’], rejecting its petition for payment of arrears at an enhanced tariff for the electricity supplied by it to the Himachal Pradesh State Electricity Board Limited⁴[for short, ‘the HPSEB’].

2. IA No. 4 of 2016 filed by the Commission seeking to be impleaded as a party respondent in this appeal is allowed and the Commission is brought on record as respondent No. 4.

3. By the impugned judgment dated 17.10.2014, the APTEL allowed the appellant’s appeal in part and held that the tariff for its 3 MW hydel power plant under the Power Purchase Agreement⁵[for short, ‘the PPA’] dated 30.03.2000 required no redetermination but the tariff for its additional 1.90 MW hydel power plant, commissioned on 10.07.2008, required to be redetermined as per the Himachal Pradesh Electricity Regulatory Commission (Power Procurement from Renewable Sources and Cogeneration by Distribution Licensee) Regulations, 2007⁶[for short, ‘the Regulations of 2007’]. The APTEL further directed that, as the entire capacity of the appellant’s power project was to be injected and evacuated from the same bus bars, a common tariff had to be determined for the power project as a whole and held that the common tariff would be the weighted average of the respective tariffs for the 3 MW and 1.90 MW plants. The appellant was held entitled to arrears on account of the difference in tariff for the period for which payment had already been made as per the existing tariff. The Commission’s order dated 05.07.2013 was set aside to that extent and the Commission was directed to pass a consequential order within a timeframe.

4. Pursuant to the above direction, the Commission determined the tariff as per the weighted average and quantified it at Rs.2.60/- per Kilowatt hour (kWh), vide order dated 11.06.2015. In accordance therewith, the appellant and the HPSEB filed a joint petition, bearing No. 106 of 2015, seeking approval of the supplementary PPA dated 03.11.2015 entered into by and between them, stipulating the new tariff as per the weighted average. Reference was made therein to the orders of the Commission and the APTEL dated 11.06.2015 and 17.10.2014 respectively and the tariff of Rs.2.60/- per kWh was incorporated for the entire project of 4.90 MW capacity with effect from 14.07.2008. Be that as it may.

5. The factual narrative needs recounting from scratch to properly gauge the issues raised in this appeal. The Government of Himachal Pradesh⁷[for short, ‘the GoHP’] and the appellant executed Implementation Agreement⁸[for short, ‘the IA’] dated 30.03.2000, whereby the appellant was to establish Baragran Hydro Electric Power Project of 3 MW capacity on Sanjoin Nallah, a tributary of River Beas, in District Kullu. Pursuant to this IA, the appellant and the GoHP executed a PPA on the same day, i.e., 30.03.2000. Clause 6.2 of the said PPA, titled ‘Tariff for Net Saleable Energy’, fixed the price to be paid by the HPSEB to the appellant at a fixed rate of Rs.2.50/- per k