Facts
The Appellant, HNPCL, operates a 1040 MW coal-based thermal power plant in Andhra Pradesh
Source reference: p.2-3Following a history of litigation regarding tariff determination, HNPCL filed O.P. No. 12 of 2024 before the Andhra Pradesh Electricity Regulatory Commission (APERC) for Multi-Year Tariff (MYT) determination for the Fifth Control Period (FY 2024-25 to FY 2028-29)
Source reference: p.4-5APERC issued an Impugned Order on 30.12.2025, which included a graded penalty deducting variable charges if monthly plant availability fell below normative levels and failed to specifically adjudicate on Part Load Compensation (PLC) claims
Source reference: p.5The Appellant challenged five issues, but by mutual consent, the Tribunal narrowed the adjudication to the legality of deductions from variable charges and the entitlement to PLC
Source reference: p.6Issues
1. Whether the State Commission has the statutory or contractual authority to impose graded deductions on variable charges (energy charges) based on shortfalls in monthly availability
Source reference: p.6, para. 82. Whether the Appellant is entitled to Part Load Compensation (PLC) and if the State Commission failed to adjudicate upon the quantification of the same
Source reference: p.17, para. 25Law Applied
The Tribunal applied the CERC (Terms and Conditions of Tariff) Regulations, 2024, and APERC Regulation 1 of 2008, which establish a two-part tariff system
Source reference: p.9, 12Under these regulations, Capacity Charges (Fixed Costs) are linked to plant availability, while Energy Charges (Variable Costs) are strictly linked to actual scheduled energy supplied
Source reference: p.9, 14a Regulatory Commission cannot deviate from the prescribed methodology of a Regulation through an adjudicatory order without a formal amendment to the Regulation
Source reference: p.14-15Relevant precedents included PTC India Ltd. v. CERC regarding the binding nature of regulations
Source reference: p.16CERC (Indian Electricity Grid Code) (Fourth Amendment) Regulations, 2016, regarding Part Load Compensation
Source reference: p.18Reasoning
Regarding Issue 1, the Tribunal reasoned that both the statutory framework (CERC/APERC Regulations) and the PPA clearly bifurcate fixed and variable costs. Fixed costs already contain an "in-built deterrent" because they are reduced proportionately if availability is low
Source reference: p.10, 14The Tribunal rejected the State Commission’s "gap-filling" argument, noting that the Commission cannot impose additional penalties on energy charges—which are intended only for fuel cost recovery—because such a mechanism does not exist in the Regulations or the PPA
Source reference: p.15Even if DISCOMs face higher costs for replacement power, the Commission must act within the "regulated framework" and cannot substitute its own view for statutory prescription
Source reference: p.14Regarding Issue 2, the Tribunal found that the PPA explicitly provides for PLC under Clause 1.2.5 of Schedule-F
Source reference: p.18Since the Respondents did not dispute the entitlement but only the process (True-Up), and the Impugned Order lacked a final determination on the quantified claim, the Tribunal found a need for reconciliation and formal determination
Source reference: p.18-19Holding
The Tribunal held that the graded deductions from variable charges were ultra vires the Regulations and the PPA; it set aside the Impugned Order on this point and directed Respondents to refund withheld amounts with carrying cost within four weeks
The Tribunal affirmed the Appellant’s entitlement to PLC and remanded the matter to the State Commission for the specific purpose of determining and finalizing the amount payable in accordance with Regulation 6.3B of the IEGC
Source reference: p.19-20Original Court PDF
HINDUJA NATIONAL POWER CORPORATION LIMITED (HNPCL)vsANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION & Ors
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