The petitioner i.e. Adani Power Maharashtra Ltd (APML) is setting up generating stations at Tiroda and has signed Power Purchase Agreement (PPA) on 8th Sept 2008 with MSEDCL under the case-1 type of bidding for capacity of 1320 MW. The petitioner chose to quote fixed tariff in spite of the flexibility under the bidding framework to quote escalable parameters for fuel cost, transportation and handling. On account of the low tariff quoted by the petitioner, it emerged as the lowest bidder (L1), thereby winning the bid. Subsequent to this process, the petitioner has filed the present matter (case no 68 of 2012) in July 2012 before the Maharashtra Electricity Regulatory Commission claiming termination of the said PPA on grounds of claimed force majeure event. However, while claiming to have terminated the PPA, the petitioner is simultaneously making a prayer for revising the discovered tariff and has informed willingness to supply at such increased rates.
The petitioner after willingly taking fuel related risks, opted to quote a fixed tariff even though the bidding framework provided the option of quoting escalable components to pass through fuel costs at the time of bidding. After eliminating competitors, the bidder is on one hand claiming unilateral termination of the PPA and on the other demanding increase in tariff and signing of a new PPA without giving other competitors any opportunity to compete on the same terms and conditions. As per the PPA, this generation of 1320 MW (which would translate into ~9,829 MU / yr.) should have become available to MSEDCL from August 2012. Not getting this power (and also power from Lanco) as per agreed rate and at decided schedule has lead to shortage and high cost short/medium term power purchase. In fact, MSEDCL is buying medium term power @ Rs. 4 per unit from the same Tiroda project of Adani to meet the present supply shortfall. If the tariff is revised by say Rs. 0.50 per unit more than the PPA agreed rate, then for next 25 years such increase will impose an additional burden of Rs. 4,539 Cr (based on NPV of this amount calculated at a discount rate of 10%).
During the hearings regarding this petition (case no 68 of 2012) Prayas made several submissions regarding un-tenability of the force majeure claim and hence the termination, under the present PPA and bidding framework. All submissions made by Prayas in this matter can be downloaded using the links below. During the hearing dated 18th January 2013, the commission suddenly pointed out that adoption of Tariff discovered through this bidding process (case-1 stage 1) has not taken place and termed its absense as a lapse on part of the Commission. In this context it was submitted that issue of absence of tariff adoption order has been brought to the notice of the commission on more than one occasion by Prayas and the commission has refrained from pursuing this matter from time to time. It was further stated that neither MSEDCL nor APML pursued the matter with the Commission. The commission's idea of combining the PPA termination related matter (case no 68 of 2012) with petition for tariff adoption filed by MSEDCL in 2008 and not dealt by the commission till recently, was opposed. Finally the commission decided to treat these two separate issues independently and a new case, no 24 of 2013 has been filed before the commission for tariff adoption. Prayas submissions pertaining to the tariff adoption matter i.e. case 24 of 2013 along with all the daily orders issued by commission in this regard can also be downloaded using the link below.
Subsequently, the commission has issued orders in both these cases. The order pertaining to tariff adoption matter was issued on 19th August 2013 and the order pertaining to compensatory tariff was issued on 21st August 2013. In both these matters, Prayas' contentions on legal issues have been upheld. Unfortunately, in spite of ruling that there is no force majeure and hence no ground for APML to seek tariff revision, the commission decided to set-up a committee to look into need and possibility of allowing additional tariff over and above the PPA agreed rate. Further, the commission has in an ad-hoc manner, also allowed increase in PPA agreed tariff for the interim period, till the committee comes out with its analysis and recommendations. Aggrieved by this decision, Prayas has approached the Appellate Tribunal for Electricity and filed an appeal (no 296 of 2013) against the said order of MERC (case no 68 of 2012). Judgement is still awaited.
While the order approving the compensatory tariff is being challenged and hearings before the Tribunal in appeal no 296 of 2013 were under progress, the MERC initaited a suo-motu process to provide compensatory tariff to the project under a new case no 63 of 2014. The order in this case case was issued on 5th May 2014 and per unit compensation of Rs. 1.01 for 800 MW capacity, out of the total 1320 MW, was granted. The suo motu order is also challenged by Prayas before the Appellate Tribunal under appeal no 218 of 2014, judgement is awaited.