Hon’ble Appellate Tribunal for Electricity holds that change in law claims can be considered at the tariff adoption stage in order to provide regulatory certainty and reduce multiplicity of proceedings.
JSA represented Green Infra Renewable Energy Limited (“GIREL”) before the Appellate Tribunal for Electricity (“APTEL”) challenging the Order dated 23.07.2021 (“Impugned Order”) passed by the Rajasthan Electricity Regulatory Commission (“the Commission”). The Commission had refused to consider Change in Law events which had occurred after award of the contract but before tariff adoption and directed that GIREL approach the Commission by way of a separate petition. The Commission had observed that at the tariff adoption stage, the Commission could only examine whether the competitive bidding process under Section 63 of the Act was in accordance with the guidelines issued by the Government of India and whether the process was held in a transparent manner.
APTEL vide its Order dated 12.10.2021 allowed GIREL’s Appeal and remanded the matter to the Commission for reconsideration of change in law claims at the tariff adoption stage holding:
- There is no regulation or contractual clause prohibiting the consideration of change in law at the stage of adoption of tariff under Section 63 of the Electricity Act 2003.
- Approaching the Commission through a fresh petition for Change in Law claims which occurred after award of the contract but before tariff adoption would only lead to multiplicity of proceedings.
- The impact of the Change in Law events has rendered the bid price unrealistic and in terms of Section 86 (1) (b) of the Act, the State Commission is duty bound to inquire into such claim at the first opportune time and bring about suitable corrections.
- If Change in Law events are within the purview of the PPA, there is no reason why these events cannot be considered at the stage of adoption of tariff.
- The tariff adoption order was inconclusive and inchoate since change in law events had not been considered.
The order is significant as APTEL has recognised that change in law events that have occurred prior to the adoption of tariff and after the submission of the bid would need to be considered by the respective State Electricity Regulatory Commissions at the tariff adoption stage itself in order to avoid confusion, regulatory uncertainty and consequent difficulties in achieving financial closure. Several projects which are at the tariff adoption stage have been impacted due to the proposed imposition of basic customs duty, increase in taxes as well as on account of the Supreme Court judgment in the Great Indian Bustard matter. This Order will help in addressing the change in law claims at an early stage.
JSA team comprised Partner – Vishrov Mukerjee, Principal Associate – Rohit Venkat, Junior Associate – Juhi Senguttavan.