JSA successfully represented Tata Power Delhi Distribution Ltd. seeking recovery of capital cost of Rithala Combined Cycle Power Plant by way of depreciation over its useful life

JSA successfully represented Tata Power Delhi Distribution Ltd. (“TPDDL”) in Appeal before Hon’ble Appellate Tribunal for Electricity (“Hon’ble APTEL”) against DERC’s Order dated 11.11.2019 in Petition No. 51 of 2017, which had restricted the recovery of depreciation of Rithala CCPP to six (6) years when the useful life of the Plant was fifteen (15) years.

In the backdrop of power shortage scenario persisting in Delhi, Rithala CCPP was set up in 2011 as a temporary measure to meet peak demand of the distribution utilities of Delhi till availability of adequate and stable electricity for Delhi in 5 – 6 years’ time. The limited issue before the Hon’ble APTEL was that:

1. DERC by its earlier Order dated 31.08.2017 had inter alia determined the useful life of Rithala CCPP as fifteen (15) years and approved the terms and conditions for purchase and sale of power between TPDDL- D and Rithala CCPP till March 2018.
2. However, DERC by Order dated 11.11.2019 had erroneously restricted the depreciation claimed by TPDDL only for six (6) years i.e., till FY 2017-18 while the useful life of Rithala CCPP was admittedly fifteen (15) years. Hon’ble APTEL by Judgment dated 10.02.2025 has:

1. 1. observed that Regulation 6.32 of DERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2011 provides that depreciation shall be calculated annually based on straight line method, over the useful life of the asset.
   2. held that since, by Order dated 31.08.2017, DERC determined the capital cost of Rithala CCPP considering the useful life of the plant as fifteen (15) years, therefore recovery of the capital cost by way of depreciation should also be spread over for a period of fifteen (15) years.
   3. set aside Order dated 11.11.2019 passed by DERC in Petition No. 51 of 2017.
   4. remanded the matter to DERC with directions to allow the recovery of entire capital cost of the Appellant’s power plant at Rithala by way of depreciation over its useful life of fifteen (15) years.

Our disputes team comprised: Lead Partner & Joint Managing Partner – Amit Kapur, Partner – Rahul Kinra, Principal Associate – Aditya Gupta, and Associate – Girdhar Gopal Khattar.