APTEL Denies NHPC Interim Relief To Keep 7-Paise BESS Margin, Leaving APERC’s 0.5%-Of-Capacity Direction In Force For Now

APERC granted in-principle approval for procurement of 500 MW/1000 MWh of battery energy storage capacity, with NHPC as intermediary procurer.

Following competitive bidding, NHPC and the Andhra Pradesh DISCOMs executed a BESSA providing for a trading margin of 7 paise/kWh; associated BESPAs were also executed.

The DISCOMs later sought approval of the agreements. In its order dated 16 March 2026, APERC approved the agreements subject to replacing the 7 paise/kWh margin with 0.5% of capacity charges and directed the DISCOMs to amend the BESSAs.

NHPC appealed under Section 111 of the Electricity Act, 2003 and sought interim relief staying that direction and preserving the agreed margin pending appeal.

Section 63 of the Electricity Act, 2003 requires the Commission to examine whether a tariff was discovered through transparent bidding in accordance with applicable Central Government guidelines; although it does not ordinarily permit the Commission to rewrite the commercial bargain, regulatory scrutiny remains available within the statutory framework.

Section 86(1)(b) empowers a State Commission to regulate electricity procurement by distribution licensees, including with regard to consumer interest.

Clause 4 of the BESS Guidelines dated 10 March 2022 provides for an intermediary procurer’s trading margin of 7 paise/kWh or 0.5% of capacity charges, “as applicable”.

Interim relief is assessed by the established tests of a prima facie case, balance of convenience and irreparable injury, with the first being essential and at least two conditions required conjunctively.

Interim mandatory relief, which may approximate final relief, requires a strong prima facie case, a balance of convenience clearly favouring the applicant and irreparable prejudice if relief is refused.

The Tribunal considered that the Guidelines appear to contemplate two alternative margin mechanisms, with the applicable mechanism depending on the transaction and charging structure; it did not finally determine whether the agreed 7 paise/kWh margin or APERC’s 0.5% capacity-charge margin governed.

The procurement had a significant capacity-based component, and the intermediary’s selection had not itself occurred through competitive bidding.

Given the competing arguments concerning the Guidelines, the contractual agreement and APERC’s regulatory authority, the Tribunal concluded that the merits required comprehensive examination at the appeal hearing.

NHPC therefore had not established a prima facie basis for the requested interim direction.

It clarified that any action taken pursuant to APERC’s order would remain subject to the outcome of the appeal, and that its observations were prima facie and would not prejudice either party at the final hearing.