Energy generated beyond normative PLF up to contracted capacity warrants interim payment of variable tariff.

The Appellant operates a 19.8 MW refuse-derived fuel (“RDF”)-based Waste-to-Energy (“WtE”) plant at Jawaharnagar, Hyderabad. It executed a Power Purchase Agreement (“PPA”) dated 19 February 2020 with Southern Power Distribution Company of Telangana Ltd. (“TSSPDCL”), and the plant achieved commercial operation on 20 August 2020.

The Telangana State Electricity Regulatory Commission (“TSERC”) determined a generic levelised tariff of ₹7.84/kWh for RDF-based projects under its Generic Tariff Order dated 18 April 2020, adopting normative PLFs of 65% for the first year, 75% for the second year and 80% from the third year onwards.

TSERC rejected the Appellant’s claims in its order dated 2 January 2024 in O.P. No. 73 of 2022, leading to Appeal No. 85 of 2024.

By IA No. 890 of 2024, the Appellant sought interim payment for energy generated beyond the normative PLF and up to the contracted capacity, release of outstanding amounts, restraint against application of the disputed PLF restriction, and protection against coercive action.

1. Whether the normative PLFs of 65%, 75% and 80% specified in TSERC’s Generic Tariff Order operate as a ceiling on the quantity of Delivered Energy payable under the PPA.

2. Whether, pending final adjudication of the Appeal, the Appellant was entitled to interim payment for energy generated beyond the normative PLF but within the contracted capacity.

3. If interim relief was warranted, what rate of payment should apply without effectively granting the final relief sought in the Appeal.

The Tribunal applied the contractual provisions of the PPA, particularly Article 1.10 and Explanation 2, which define Delivered Energy and limit it to energy calculated at 100% PLF of the net exportable capacity, and Articles 2.1 and 2.2, which require purchase and payment for net energy delivered at the tariff determined by TSERC, subject to the contracted-capacity restriction.

Article 1.22 makes PLF a ratio determined by TSERC.

It also considered Clause 6.4(2) of the National Tariff Policy, 2016, requiring compulsory procurement of 100% of power produced by WtE plants, and the applicable Telangana RPPO Regulations.

For interim relief, the Tribunal applied the settled principles of prima facie case, balance of convenience and irreparable injury, holding that a prima facie case is essential and that at least two of the three requirements must be satisfied conjunctively.

Final relief should not ordinarily be granted at the interlocutory stage, as urged on the basis of State of U.P. v. Ram Sukhi Devi, (2005) 9 SCC 733.

The Tribunal found, prima facie, that the PPA expressly contemplated Delivered Energy up to 100% PLF of the net exportable capacity and that Article 2.2 imposed a payment restriction only for energy delivered beyond the contracted capacity.

Although TSERC had adopted normative PLFs and declined to grant an additional incentive for generation above those norms, the Generic Tariff Order contained no categorical statement that generation, purchase or payment was capped at the normative PLF.

The Tribunal distinguished a performance incentive from the underlying tariff payable for energy delivered under the PPA, and held that rejection of an incentive did not, at the interim stage, establish exclusion of payment altogether.

Since the Discom had consumed the excess energy and the Appellant’s claim was limited to energy within the contracted capacity, denial of any interim payment could cause underutilisation of the plant and irreparable prejudice.

Nevertheless, granting the full levelised tariff would substantially pre-judge the Appeal; therefore, the Tribunal adopted the levelised variable component as an interim measure.

It directed TSSPDCL to pay the levelised variable cost determined in the Generic Tariff Order dated 18 April 2020 for energy generated beyond the normative PLF but up to the contracted capacity.

Payment for the past period was directed to be made within six weeks of receipt of the order, and the same rate was directed to be included in future invoices.

All payments were made subject to the outcome of Appeal No. 85 of 2024.

IA No. 890 of 2024 was accordingly disposed of, and the main Appeal was directed to be listed for final hearing after verification that the pleadings were complete.