Solar Developer’s Rs 8.40 Tariff Turns on Whether Full Capital Cost Was Crystallised Before SCOD; APTEL Remands for Review

Jayamal Energy LLP entered into a PPA with BESCOM on 2 July 2015 for a 2 MW solar project.

The PPA was approved by KERC on 25 August 2015.

The project was commissioned on 31 August 2017, after BESCOM had granted extensions of time, ultimately up to 1 October 2017.

KERC rejected the developer’s petition seeking approval of the extension and the PPA tariff of ₹8.40/kWh; it instead applied the tariff of ₹4.36/kWh and held the developer liable for damages under the PPA.

The developer appealed.

Under Section 86(1)(b) of the Electricity Act, 2003, a distribution licensee’s power procurement and the price payable under a PPA are subject to regulatory oversight and approval.

The Tribunal relied on Tata Power Company Ltd. v. Reliance Energy Ltd., (2009) 16 SCC 659, and its decisions in Rithwik Energy Generation Pvt. Ltd. v. Karnataka Power Transmission Corp. Ltd., 2011 ELR (APTEL) 1651, and Eswari Green Energy LLP v. KERC, Appeal No. 180 of 2018 and batch, for the principle that a PPA requiring regulatory approval becomes operative upon approval.

Under PPA Articles 2.5.1–2.5.4, extensions are limited to the specified periods; Article 5.1 provides for the lower applicable tariff where commissioning is delayed beyond the permissible extension and the tariff has varied.

Article 8.3(b)(i) requires written notice of a force majeure event as soon as practicable.

The Tribunal applied Chamundeshwari Electricity Supply Co. Ltd. v. Saisudhir Energy (Chitradurga) Pvt. Ltd., Civil Appeal No. 6888 of 2018 (25 August 2025), for the rule that such notice is a condition precedent to invoking force majeure.

It also applied Smt. Sharada Doddi v. Gulbarga Electricity Supply Co. Ltd., Appeal No. 418 of 2023 (4 December 2025), under which the PPA tariff may be protected if the project’s capital cost crystallised before the SCOD.

The Tribunal held that the PPA became effective when KERC approved it on 25 August 2015, making 25 February 2017 the SCOD.

Although BESCOM had extended the commissioning date, the Tribunal found that, because the claimed delay related to force majeure events affecting the developer, Article 2.5.4 allowed an extension of no more than three months.

The SCOD therefore extended only to 25 May 2017; the project’s commissioning on 31 August 2017 was beyond that period.

The developer could not obtain force majeure relief because it had not provided the notice required by Article 8.3(b)(i), and the Tribunal therefore upheld the damages liability.

On tariff, the Tribunal found the record insufficient to determine whether the project’s capital cost had crystallised before the SCOD.

Following Sharada Doddi, it remitted that question to KERC: if the capital cost had crystallised before 25 February 2017, the PPA tariff would apply; otherwise, the tariff applicable on the actual commissioning date would apply.

The Tribunal held that the effective date was 25 August 2015 and that the permissible extension ended on 25 May 2017; it affirmed the developer’s liability for damages under PPA Articles 2.2 and 2.5.7.

It remitted the tariff issue to KERC to determine whether the capital cost had crystallised before the SCOD, directing KERC to complete the inquiry within one month.

If so, the tariff would be ₹8.40/kWh from the actual commissioning date, with applicable carrying cost; otherwise, the tariff applicable on the actual commissioning date would govern.