CERC approves tariffs for SECI's 1,200 MW wind projects, recognising GST changes?

18 Mar 2024 CW Team

The Commission recognised the increase in GST rates on renewable energy devices as a Change in Law event following a notification from the Ministry of Finance after July 6, 2021. This recognition entitles wind power developers to appropriate remedies specified in the power purchase agreements (PPAs) due to additional expenditures resulting from the Change in Law event.

SECI had previously filed a petition under Section 63 of the Electricity Act, 2003, seeking tariff adoption for the wind power projects (Tranche-XI) connected to ISTS. SECI requested the adoption of tariffs determined through a competitive bid process, approval of trading margins, and acknowledgement of clauses in PPAs regarding changes in safeguard duty, GST, and primary customs duty rates.

Respondents included ReNew Naveen Urja, Anupavan Renewables, Green Infra Wind Energy, Azure Power, Adani Renewable Energy, Two Wind Energy, Madhya Pradesh Power Management Company, Chhattisgarh State Power Distribution Company, and Uttar Pradesh Power Corporation.

SECI conducted an e-reverse auction on September 9, 2021, and granted a letter of award (LOA) to selected companies on October 21, 2021. The projects are expected to be commissioned in 2023-24, facilitating the meeting of distribution licensees' Renewable Purchase Obligations and providing power at economical rates.

The Commission analysed the case on February 7, 2023, and considered the objections raised by respondents. It noted SECI's amendments post-bid and recognised the increase in GST rates as a Change in Law event, granting wind power developers applicable reliefs.

The Commission emphasised that the present proceedings focus solely on tariff adoption and directed respondents to file separate petitions addressing concerns related to PPAs.

Furthermore, CERC recently permitted a renewable energy developer to claim compensation to counteract the financial impact of Change in Law events due to increased goods and service tax rates.

The Central Electricity Regulatory Commission (CERC) has approved tariffs for SECI's 1,200 MW wind power projects. Tariffs of Rs 2.69 (0.0326)/kWh (450 MW, 120 MW) have been sanctioned, along with a trading margin of Rs 0.07 (~$0.00084)/kWh. This approval applies to wind power projects connected to the interstate transmission system (ISTS) under Tranche-XI to operate on a build-own-operate basis.The Commission recognised the increase in GST rates on renewable energy devices as a Change in Law event following a notification from the Ministry of Finance after July 6, 2021. This recognition entitles wind power developers to appropriate remedies specified in the power purchase agreements (PPAs) due to additional expenditures resulting from the Change in Law event.SECI had previously filed a petition under Section 63 of the Electricity Act, 2003, seeking tariff adoption for the wind power projects (Tranche-XI) connected to ISTS. SECI requested the adoption of tariffs determined through a competitive bid process, approval of trading margins, and acknowledgement of clauses in PPAs regarding changes in safeguard duty, GST, and primary customs duty rates.Respondents included ReNew Naveen Urja, Anupavan Renewables, Green Infra Wind Energy, Azure Power, Adani Renewable Energy, Two Wind Energy, Madhya Pradesh Power Management Company, Chhattisgarh State Power Distribution Company, and Uttar Pradesh Power Corporation.SECI conducted an e-reverse auction on September 9, 2021, and granted a letter of award (LOA) to selected companies on October 21, 2021. The projects are expected to be commissioned in 2023-24, facilitating the meeting of distribution licensees' Renewable Purchase Obligations and providing power at economical rates.The Commission analysed the case on February 7, 2023, and considered the objections raised by respondents. It noted SECI's amendments post-bid and recognised the increase in GST rates as a Change in Law event, granting wind power developers applicable reliefs.The Commission emphasised that the present proceedings focus solely on tariff adoption and directed respondents to file separate petitions addressing concerns related to PPAs.Furthermore, CERC recently permitted a renewable energy developer to claim compensation to counteract the financial impact of Change in Law events due to increased goods and service tax rates.