JSA successfully represented Amplus Sun Solutions Pvt. Ltd. (“Amplus”) against Haryana Power Purchase Center (“HPPC”) in cross-appeals challenging HERC’s Order dated 18.01.2021 slashing by 36% Amplus’s fixed charges claims from Rs. 3.86 per kWh to a project specific levelized tariff of Rs. 2.48 per kWh.
The matter relates to determination of tariff in respect of Amplus’s 50 MW Solar Power Project in the State of Haryana at Bhiwani. Amplus’s grievance was that HERC had: –
- Disallowed module cost and cost of civil works of Rs. 44 Crores and Rs. 6.81 Crores respectively relatable to the extra 25 MW Direct Current (“DC”) capacity [the plant was operating on 50 MW Alternate Current (“AC”) : 75 MW DC capacity], contrary to accepted industry practice where generators optimize installed AC capacity by installing Solar Panels of higher DC Capacity without exceeding the contracted capacity.
- Allowed Interest on Term Loan and Working Capital @ 9% instead of actual 9.91%.
- Erred to disallow IDC of Rs. 9.59 Crores on the wrong premise that Amplus has not borrowed funds.
- HERC benchmarked O&M Expenses against BHEL’s quotes for 50 MW Solar Power Plant of NTPC in Andhra Pradesh.
- Disallowed Project Management Expenses of Rs. 23.75 Crores without prudence check.
Per contra, HPPC challenged Impugned Order since: –
- Capital Cost allowed is higher than other Solar Projects
- CUF of 25.91% allowed instead of 27.17% as per generation data in Amplus’ PPA.
- Degradation of 0.5% in CUF has not been allowed by other SERCs.
- Escalation rate of 5.72% p.a. allowed for O&M Expenses should be reduced.
Amplus had sought pro-tem tariff of Rs. 3.03/ kWh, inter alia, since: –
- Amplus was prevented from drawing down the balance term loan facilities due to the present tariff being inadequate to service its debt obligations.
- NIIF Infrastructure Finance Ltd. (“NIIF”) had threatened to cancel the balance sanctioned loan facility of Rs. 81 Crores if Amplus does not get an economic tariff.
- Amplus was compelled to suffer revenue losses of over Rs. 51.71 Crores till 30.06.2024.
To seek emergent disposal, Amplus restricted its claim on issues of Capital Cost only, giving up claims re. Interest on Term Loan and Working Capital, IDC, and O&M Expenses.
Hon’ble APTEL by Judgement dated 25.10.2024: –
- Set aside the HERC Order with respect to failure to conduct prudence check reflected in the disallowance of the Capital Cost incurred on higher DC module when it factored higher CUF for supply to Discoms.
- Remanded the matter to HERC to redetermine the feasible CUF corresponding to the Capital Cost of AC: DC module allowed.
- Clarified that the issues regarding Interest on term loan and working capital, Interest During Construction and O&M expenses shall not be reconsidered.
- In the interregnum, Amplus is allowed a tariff of Rs. 3.03 per Kwh from the date of HERC’s order till the matter is finally decided by HERC upon remand.
Our Disputes Team Comprised Joint Managing Partner – Amit Kapur, Partner – Rahul Kinra, Senior Associate – Aditya Ajay and Junior Associate – Sanjay Nair S.
Amit Kapur is a Partner with JSA since 2000. He has anchored the Firm’s Infrastructure practice since 1997 with focus on infrastructure sectors. Having served as Senior Partner of JSA since 01.04.2017, on 01.01.2019, Amit assumed office as the Joint Managing Partner of the Firm.