Hydrological changes are business risks and justify tariff revision only if project existence is endangered.

The Appellant developed a 16 MW Hydro Electric Project in Himachal Pradesh

It entered into a Power Purchase Agreement (PPA) with the Respondent Board (HPSEB) on 05.07.2004 at a tariff of Rs. 2.25/kWh, based on an initial Design Energy of 78.81 MU (revised to 78.02 MU)

In a previous round of litigation (Patikari-1), this Tribunal granted the Appellant liberty to approach the State Commission (HPERC) if actual river discharge was significantly lower than the DPR data, provided such change "endangered the existence" of the project

The Appellant filed Petition No. 74 of 2017 seeking a downward revision of Design Energy to 56.98 MU and a tariff increase to Rs. 3.11/kWh due to lower water inflows

HPERC dismissed the petition via orders dated 21.11.2018 and 15.05.2020, holding that lower generation alone does not justify reopening a PPA or revising design energy

1. Whether the HPERC is empowered to reopen or modify a concluded PPA to revise tariff based on changed hydrological circumstances.

2. Whether the reduction in river discharge was of such magnitude as to "endanger the existence" of the project, thereby warranting a tariff hike.

Electricity Act, 2003, specifically Sections 61 and 62 regarding tariff determination

Regulation 6(1) of the HPERC (Power Procurement from Renewable Sources...) Regulations, 2007, which permits modification of PPAs under specific conditions

The "litmus test" for relief was derived from the Tribunal’s own binding precedent in Patikari-1 (Appeal 179/2010), which held that a project’s tariff can only be reconsidered if natural factors beyond the developer’s control endanger its very "existence"

GUVNL v. Solar Semiconductor (2017), which limits the power of Commissions to override PPAs unless specifically authorized by subsequent legislation

Return on Equity (RoE) is a business risk and lower returns do not constitute a ground for reopening a voluntary contract

The Tribunal focused on whether the lower hydrology posed an "existential threat" to the project, defining "existence" as the ability to meet Operation Maintenance (OM) expenses and stay operational

On a technical review, the Tribunal found that while Design Energy was 78.02 MU, the average theoretical generation based on measured data was 74.53 MU

Financial analysis revealed that the rational expectation of annual revenue at the DPR stage was approximately Rs. 1660 Lakh, while the actual average revenue was approximately Rs. 1635 Lakh—a negligible reduction of only 1.5%

Furthermore, normative OM expenses for a 16 MW plant were estimated at Rs. 360 Lakh, which consumed only about 22% of the average annual revenue, leaving a substantial margin for debt servicing

The Tribunal noted the project was operated efficiently with 99.38% machine availability

It rejected the Appellant's claims of financial distress, noting that the Appellant failed to provide a detailed account of revenue application or prove that occasional debt-servicing difficulties amounted to systemic unviability

It held that the Appellant failed to establish that the change in hydrology was of such magnitude as to endanger the project's existence or render it unviable

The Tribunal further held that since the claim failed on merits, the legal question of whether the Commission could modify a PPA retrospectively remained theoretical and unnecessary to decide

All pending applications were disposed of