Summary
The Court sustained change-in-law compensation for a generating project whose bid and power purchase agreement were based on domestic coal, despite an imported-coal backup arrangement. Changes to domestic coal policy impaired the underlying supply assurance and entitled the generator to restitution for the actual domestic-coal shortfall, including carrying cost. The appeals succeeded only on interest: the Court reduced the contractual late-payment burden to applicable SBAR capped at nine percent, compounded annually.
Issues
- Whether the bid and agreement were based on domestic coal despite the imported-coal supply arrangement.
- Whether changed domestic coal policy entitled the generator to compensation and carrying cost.
- Whether contractual late-payment interest should be modified on the facts.
Provisions considered
- Articles 1.1, 10 and 15.6.2; Schedule 5, Power Purchase Agreement dated 28 January 2010Applied the domestic-coal foundation, change-in-law restitution mechanism and supersession of prior communications. (¶¶ 36, 39, 40, 41, 47, 48, 49, 54, 56, 57, 58, 60, 61, 63)
- Articles 8.3.5 and 8.8, Power Purchase Agreement dated 28 January 2010Considered the contractual surcharge and modified the applicable rate and compounding for this case. (¶¶ 64, 65, 66, 67, 68)
Held
- The bid was evaluated and the tariff adopted on domestic coal. The imported-coal agreement demonstrated fuel readiness and provided fallback supply; it did not alter the agreed primary fuel. The procurers could not contradict the final tariff-adoption order and their own consistent admissions. (¶¶ 28, 29, 30, 31, 33, 34, 35, 36, 37, 39, 40, 41, 42, 43, 44, 45, 46, 47)
- The 2013 domestic coal-policy changes affected the supply assurance prevailing at the contractual cut-off date and attracted Article 10, notwithstanding the absence of an issued domestic linkage or fuel supply agreement at bidding. The claim arose from changes in Indian policy, rather than changes in Indonesian law. (¶¶ 50, 51, 52, 53, 54, 55, 56, 57, 59)
- Compensation was confined to the actual shortfall in domestic linkage coal, including the relevant post-SHAKTI shortfall. It was not restricted by an asserted imported/domestic fuel ratio because the bid was not evaluated on a dual-fuel tariff basis. The five-year imported-coal backup did not negate change-in-law relief. (¶¶ 48, 49, 60, 61, 63)
- The contractual purpose was to restore the affected party to the economic position it would have occupied without the change in law. Carrying cost was restitution for deferred payment and payable from the change-in-law event, rather than a penalty. Verification of supporting documents and payment under the established principles did not require a fresh determination by the Commission. (¶¶ 54, 58, 64, 65)
- To do complete justice on these facts, the contractual surcharge of two percent above applicable SBAR with monthly compounding was modified. Interest or late-payment surcharge was to be at applicable SBAR for the relevant years, capped at nine percent annually and compounded annually; the additional two percent was excluded. (¶¶ 66, 67, 68)
- Unconcluded over-invoicing allegations did not displace the concurrent findings. The Federation’s standing and maintainability were expressly left open because the procurers’ appeals enabled examination of the merits. (¶¶ 69, 70)
Result
Appeals partly allowed only to the indicated extent concerning interest/late-payment surcharge. Change-in-law compensation and carrying-cost entitlement sustained; no order as to costs.