Facts
The Appellant (OPGC) operates a thermal power station (Units 1 & 2). A Bulk Power Supply Agreement (PPA) was executed in 1996 and amended in 2012
Source reference: p.4Disputes regarding tariff determination reached the Supreme Court, which on 19.04.2018 directed that fixed costs be determined by a 2008 Government Notification, variable costs by the PPA, and "other costs" by OERC Regulations
Source reference: p.7, 16Consequently, OPGC filed Case No. 54 of 2018 seeking additional capitalization of ₹122.15 crore for FYs 2015-18
Source reference: p.7, 13The State Commission (OERC) rejected the claim on 21.05.2021, holding that capital costs were frozen by the PPA/Notification and the expenses were in the nature of O&M
Source reference: p.8, 12-13Issues
1. Whether "Additional Capitalization" falls under the category of "other costs" as per the Supreme Court’s 2018 roadmap, thereby allowing OERC Regulations to apply over the PPA
Source reference: p.16, 182. Whether the capital cost of the project was frozen as a "parameter" under the negotiated PPA settlement
Source reference: p.193. Whether the OERC was correct in categorizing the claimed expenditure as Operation and Maintenance (O&M) based on Plant Load Factor (PLF) performance
Source reference: p.14Law Applied
The Tribunal primarily interpreted the directions of the Supreme Court in OPGC v. OERC (CA No. 9485 of 2017) regarding the tripartite division of costs (Fixed, Variable, and Other)
Source reference: p.16It applied the principle of res judicata, holding that specific judicial directions override general statutory regulations
Source reference: p.21-22It also relied on the definition of "Capital Expenditure" versus "Revenue Expenditure" similar to Rule 84 of the General Financial Rules, 2017
Source reference: p.14OERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2014, specifically Regulation 3.3 regarding the mandatory submission of the original scope of work for additional capitalization
Source reference: p.15-16Reasoning
The Tribunal rejected the OERC’s reasoning that capital expenditure is defined by PLF improvement, clarifying that PLF is a measure of utilization, not asset enhancement
Source reference: p.14-15The Tribunal found that the 1996 PPA expressly listed "Capital Cost" as a fixed "parameter" (frozen at ₹1060 Cr) rather than a floating input
Source reference: p.19-20It reasoned that "Additional Capitalization" is not an independent "other cost" but an addition to "Capital Cost," which was already exhausted under the "Fixed Cost" limb of the Supreme Court's directions governed by the Government Notification
Source reference: p.18-20Furthermore, the Appellant failed to comply with the mandatory requirement of Regulation 3.3 to provide the original scope of work, making a prudence check impossible
Source reference: p.16The Tribunal emphasized that the PPA was a negotiated settlement intended to provide tariff certainty, and allowing additional capitalization would disturb this contractual allocation of risk
Source reference: p.20-23Holding
The Tribunal concluded that the State Commission correctly disallowed the additional capitalization, though for different reasons
It held that the capital cost was a frozen parameter under the PPA and the Supreme Court’s directions
Source reference: p.20The Tribunal further observed that since the foreign investor (for whom the special dispensation was created) had divested, the Government of Odisha should review whether this special tariff framework remains necessary
Source reference: p.23-24The appeal was dismissed, and the Impugned Order was affirmed
Source reference: p.24Original Court PDF
Odisha Power Generation Corporation LimitedvsOdisha Electricity Regulatory Commission & Ors.
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