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Telangana DISCOM tasked with paying dues for solar power generator

The Telangana State Electricity Regulatory Commission (TSERC) recently ordered the state distribution company (DISCOM) to pay for electricity supplied by a solar power generator with interest within 45 days.

The state regulator also ordered DISCOM to open a “letter of credit” in favor of the petitioner to promptly make all future payments.

Winsol Solar Fields had filed a petition seeking the release of dues along with late payment interest and consequent relief from paying future bills promptly in accordance with the Power Purchase Agreement (PPA). The company has a 10 MW solar power project in Mahabubnagar district in Telangana.

Background

Winsol Solar Fields is a power generation company operating a 10 MW solar power project connected to Kodangal 132/33 kV substation in Mahabubnagar district of Telangana.

In 2014, the Southern Power Distribution Company of Telangana (TSSPDCL) and the Northern Power Distribution Company of Telangana (TSNPDCL) launched a tender for the acquisition of 500 MW of solar energy through a process of competitive bidding based on tariffs.

First Solar Power India, the petitioner’s parent company, participated in the bidding process and successfully offered a tariff of ₹6.90 (~US$0.087)/kWh. TSSPDCL signed the PPA on April 10, 2015, with First Solar to purchase power for 25 years. Later, First Solar incorporated the Petitioner as a wholly owned subsidiary and as a result, the PPA was revised on behalf of the Petitioner.

Winsol Solar Fields issued monthly invoices to TSSPDCL for the energy supplied. According to the PPA, TSSPDCL was to make payments within 30 days of the date of the meter reading. The solar generator was entitled to late payment surcharge (LPS) pursuant to the PPA, which provides that in the event of late payment beyond 30 days, TSSPDCL shall pay interest at the prevailing SBI bank rate on the amount outstanding payment.

He added that the unpaid monthly bills from November 2020 to September 2021 amounted to ₹114.84 million (~$1.45 million). Moreover, TSSPDCL had not even paid the LPS on late payment of invoices issued before November 2020 and as a result was liable to pay ₹31.01 million (~$390,639).

The solar energy producer clarified that in addition to communications regarding the non-payment of outstanding amounts, it also wrote to TSSPDCL for the opening of the revolving “letter of credit”, but without any effect.

Commission analysis

The Commission observed that while the defendants had not paid the petitioner for the energy bills issued since November 2020, they were recovering the tariff for the energy purchased from the Kodangal project from the end consumers. The cost of supplying electricity from the petitioner had been taken into account in the tariff charged by TSSPDCL to its consumers. Despite the recovery of these amounts, payments to the petitioner were withheld.

“DISCOM’s non-payment of dues has a cascading effect that not only negatively impacts the petitioner’s solar project, thereby causing enormous loss to investors through no fault of their own, but also to banks and financial institutions that funded the solar project,” the Commission said.

The Commission stated that in the absence of any dispute from the State DISCOM, there should be no dispute over the sums owed by the DISCOM to the petitioner.

Considering all the facts, the Commission granted the applicant relief for the amount invoiced and the interest claimed. He ordered the Respondent to put in place an irrevocable revolving letter of credit issued in favor of the power producer within 45 days.

In March last year, the Telangana Solar Power Developers Association urged the Chief Minister of the State to advise the Telangana State Energy Coordinating Committee and DISCOMs in the Telangana to immediately discharge at least six months of payments due to solar energy developers.

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