SESI case against GERC in APTEL for fixing of tariff for Solar Projects. Final Order in the SESI vs. GERC is attached for your i

The Summary of the APTEL’s findings are as below;

1. Operation & Maintenance Expenses: The State Commission should have maintained O&M expenses in absolute value at lest at the same level as approved for FY 2010-1 i.e. Rs. 8.25 lakhs/MW. Accordingly, we direct the State Commission to redetermine the O&M cost and allow at lest 8.25% of the capital cost.
2. Inverter replacement cost: We do not want to interfere with the assessment of cost reduction for inverter @ 10% p.a. made by the State Commission for the reason indicated in paragraph 9.4 of the judgment. However, the State Commission has incorrectly computed the inverter replacement cost at 3.81% of the capital cost in the 13th year. With annual reduction of 10% in inverter cost the cost in the 13th year would work out to 4.24% of the capital cost and not 3.81%. Accordingly, the State Commission shall correct the inverter replacement cost.
3. Working Capital: We do not find any infirmity in the State Commission’s order in determinig the working capital.
4. Return on Equity: The State Commission is not bound to adopt the RoE as provided in the Central Commission’s Regulations. If the State Commission has decided to allow post tax RoE of 14% to renewable energy projects as applicable to power projects of conventional energy sources, we cannot find fault with the same. However, the State Commission should have followed the principle of grossing up of the income tax as decided by this Tribunal in Appeal no. 174 of 2009, 68 of 2009 and Review Petition no. 9 of 2010 in Appeal no. 68 of 2009. Accordingly, directed.
5. Discount factor: We do not find any infirmity in the State Commission adopting a discount factor of 10.74% as per the Central Commission’s notification dated 7.10.2011.
6. Annual degradation of Solar Plant: We feel that the issue raised by the Appellant needs to be considered to examine if the levellising tariff allowed by the State Commission ensures recovery of the revenue permissible to the Developers in the life cycle of the solar plant at the energy sent out with degradation. Accordingly, the matter is remanded to the State Commission.
7. Tariff for first 12 years: We find that the State Commission has balanced the interests of the project developer and the consumer by allowing a tariff of only about 8.5% higher than the levellised tariff during the first 12 years. We do not find any reason to interfere with the findings of the State Commission in this regard.
8. Successive revision in tariff: This issue does not survive as the learned counsel for the Appellant during the rejoinder submission decided not to press the issue.
9. Clean Development Mechanism: In view of the clarification given by the State Commission that the CDM benefit has to be shared by the Project Developer with GUVNL on cash basis, the issue would not survive.
10. Project specific tariff: We do not find force in the argument of the Appellant regarding option for project specific tariff. The findings of the Tribunal in Techman case (Appeal nos. 50 & 65 of 2008) for hydro projects will not be applicable to the present case.

In view of above, the Appeal is partly allowed to the extent as indicated above