- 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: –
- Whether the State Commission is empowered to levy Grid Support Charges on non-Captive Co-generation plants?
- Whether Grid Support Charges should be levied on total installed capacity of the plant?
- Whether the reasoning for levy of Grid Support Charges is justified?
- 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: –
- 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].
- 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].
- There is no decision either APTEL or by Supreme Court regarding imposition of Grid Support Charges on non- Captive Power Plants [Para 26].
- 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: –
- 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].
- State Commission has powers to determine and impose Grid Support Charges on Captive Power Plants [Paras 62 and 70].
- 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
Poonam has been actively involved in the disputes and corporate practice of the firm with primary focus in the Energy and Transportation Sector. For over a decade with the firm, Poonam has specialized in Power and Aviation Sectors.