Co-Generation Plants not liable to pay Grid Support Charges- APTEL holds

  • JSA successfully led Rain CII Carbon (Vizag) Ltd (“Rain Carbon”), a leading Pet Coke manufacturer and a Power Producer, in an Appeal before Appellate Tribunal for Electricity (“APTEL”). The Appeal was filed challenging the levy of Grid Support Charges on Co-Generation Plants by Andhra Pradesh Electricity Regulatory Commission (“APERC”). APTEL, in its Judgment dated 14.12.2023, accepted all submissions of Rain Carbon, and held that a non-captive Co-Generation Plant is not liable to pay Grid Support Charges and the levy shall be limited to only the power consumed by the co-located load, if any.

 

  • Four issues were framed and adjudicated by the Supreme Court: –
  1. Whether the State Commission is empowered to levy Grid Support Charges on non-Captive Co-generation plants?
  2. Whether Grid Support Charges should be levied on total installed capacity of the plant?
  3. Whether the reasoning for levy of Grid Support Charges is justified?
  4. Whether imposition of Grid Support Charges leads to double levy on the Appellant?

 

  • Key findings of the APTEL Judgment dated 14.12.2023 are summarized below: –
  1. Grid Support Charges cannot be levied on the entire installed capacity as that would mean levying Grid Support Charges even for the capacity which is sold to 3rd parties [Para 10].
  2. Generators which are not self-consuming the power, i.e., not having the captive loads, cannot be said to be drawing support from the grid, and thus cannot be asked to pay Grid Support Charges [Para 66].
  3. There is no decision either APTEL or by Supreme Court regarding imposition of Grid Support Charges on non- Captive Power Plants [Para 26].
  4. Levy of Grid Support Charges on the Appellant’s non-captive power plant shall be limited to only the power consumed by the co-located load [Summary of Judgment].

 

  • APTEL in its Judgment, also settled the following position of law: –
  1. Co-Generation Plant, operating parallel to the grid, can be levied with Grid Support Charges only when it is a Captive Power Plant and consuming more than 51% of the energy produced by such plant [Paras 78 and 80].
  2. State Commission has powers to determine and impose Grid Support Charges on Captive Power Plants [Paras 62 and 70].
  3. No reason has been provided by APERC in excluding the generators from the paying Grid Support Charges who have signed PPAs with Discoms [Para 73].
  • This APTEL Judgment qualifies as a ‘Landmark Judgment’ as it is for the first time, APTEL held Co-Generation Plants not liable to pay Grid Support Charges. This should put to rest several long-standing litigations initiated by Discoms against Co-Generation Plants and will help several other generators in the sector where similar issues are pending.

Our Disputes Team Comprised Lead Partner –Poonam Verma Sengupta, Senior Associate – Saunak Kumar Rajguru and Associate – Sakshi Kapoor