JUDGEMENT

PER HON’BLE MR. SANDESH KUMAR SHARMA, TECHNICAL MEMBER

1. This Appeal has been filed by Uttarakhand Power Corporation Ltd. challenging the order dated 24.11.2017 passed by Uttarakhand Electricity Regulatory Commission (in short “UERC” or “Commission”) in Petition No. 40 of 2017 (Suo-Motu) whereby the UERC has determined the tariff concerning the project of the Respondent No. 1 for its entire life.

Description of the Parties

2. The Appellant M/s. Uttarakhand Power Corporation Ltd. (in short “UPCL”) is the distribution licensee in the State of Uttarakhand.

3. Respondent No. 1, Uttar Bharat Hydro Power Pvt. Ltd. (in short “UBHPPL”) is the generating company from which the Appellant draws power for distribution in the State of Uttarakhand.

4. The Respondent No. 2, UERC is the State Commission vested with the powers to adjudicate the issue herein under the Electricity Act, 2003 (in short “Act”).

Factual Matrix of the Case

5. The UERC initially framed the UERC (Tariff and Other Terms for Supply of Electricity from Renewable Energy Sources and Non-Fossil Fuel-Based Co-Generating Stations) Regulations, 2010.

6. Subsequently, under the powers conferred by Sections 61(h), 86(1)(e), and 181(zp) of the Electricity Act, 2003, the UERC (Tariff and Other Terms for Supply of Electricity from Renewable Energy Sources and Non-Fossil Fuel-Based Co-Generating Stations) Regulations, 2013 (RE Regulations, 2013) were enacted, thereby repealing the 2010 Regulations under Clause 1(3).

7. Respondent No. 1 filed a petition seeking a determination of project- specific tariff for its 10.5 MW Sarju III Small Hydro Project (SHP) at Kapkote, Bageshwar, and the UERC, by its order dated 16.03.2017, determined a levelized tariff of ₹5.52 per unit for the said project.

8. Subsequently, on 06.06.2017, Respondent No. 2 invited objections to proposed amendments to the RE Regulations, 2013, and the Appellant submitted its comments on 27.06.2017.

9. The UERC issued a Statement of Reasons for the proposed amendments and subsequently notified the UERC (Tariff and Other Terms for Supply of Electricity from Renewable Energy Sources and Non-Fossil Fuel-Based Co-Generating Stations) (Third Amendment) Regulations, 2017 (Regulations, 2017) through a notification dated 08.09.2017, which was published in the official gazette on 23.09.2017.

10. Thereafter, the UERC initiated Suo Motu Petition No. 40 of 2017 and, through its order dated 24.11.2017, revised the O&M expenses of Respondent No. 1 with retrospective effect. However, the Appellant was neither served with the Suo Motu Petition nor issued any notice for a hearing before the final order was passed, thereby violating the principles of natural justice.

11. Additionally, the Regulations, 2017 cannot be applied retrospectively.

12. Thus, being aggrieved by the impugned order dated 24.11.2017 in Petition No. 40/2017, the Appellant has preferred the present Appeal.

Submissions of the Appellant

13. The Appellant submitted that as per Regulation 3(nn), the useful life of a small hydro plant is 35 years. Regulation 14(7) states that before reaching normative levels, any shortfall or gain in performance due to other reasons shall be borne or retained by RE-Based Generating Stations and Co-Generating Stations.

14. Additionally, no true-up of any parameter, including additional capitalization for any reason, shall be permitted during the validity of the tariff.

15. Regulation 28 specifies the parameters for determining the generic tariff for small hydropower generation stations.

16. The tariff for the plant for 35 years i.e., the entire useful life was determined by UERC vide order dated 16.03.2017 wherein in Para 3.13 and 3.14, it is mentioned as under:

“3.13. Levelised Tariff.

In light of the above discussions & computation made for Annual Fixed Charges (AFC), Annual Tariff & Discounting Factors, levelised tariff for the entire life of the project has been computed which comes out to Rs. 5.52 per unit against the proposed levelised tariff of