Summary
The Maharashtra distribution company challenged APTEL's judgment holding that the SHAKTI Policy of May 2017 is a Change in Law under its power purchase agreements with Adani Power Maharashtra, that compensation for domestic coal shortfall cannot be capped at 25% of Assured Coal Quantity, that a formal Change in Law notice was not a precondition and that carrying cost was payable. The Supreme Court dismissed the appeals, holding that the SHAKTI Policy, which reduces assured coal from 100% under NCDP 2007 to 70% of ACQ, is a Change in Law attracting the restitutionary principle recognised in Energy Watchdog and Adani Power Rajasthan, that APTEL's findings on notice and carrying cost were neither perverse nor contrary to statute, and that concurrent decisions of expert bodies are not to be disturbed absent such defects.
Issues
- Whether the introduction of the SHAKTI Policy amounts to a Change in Law under the PPAs, and whether the generator's failure to give a Change in Law notice under Article 13.3.2 disentitles it to relief.
- Whether the generator is entitled to carrying cost on Change in Law compensation from the date of the event until approval.
- Whether MERC's direction requiring advance intimation of the impact of alternate coal on energy charges for merit order despatch was justified, and what is the scope of interference with APTEL's concurrent findings.
Provisions considered
- Article 13 (Change in Law), including Clauses 13.1.1, 13.2 and 13.3.2, Power Purchase Agreements between MSEDCL and Adani Power Maharashtra LimitedA change in any consent, approval or licence otherwise than by the seller's default which changes the cost of selling electricity is a Change in Law; Clause 13.2 embodies a restitutionary principle restoring the affected party to the same economic position; the notice requirement in Clause 13.3.2 is not a device for intimating procurers of scheduling impacts. (¶¶ 21, 22, 24, 25, 28, 29, 31)
- Clause 6.1 and the assured supply of 70% of Assured Coal Quantity, SHAKTI Policy of the Ministry of Power dated 22 May 2017The policy requires the Appropriate Commission to consider the cost of imported or e-auction coal procured to make up domestic shortfall for pass-through; it assures only 70% of ACQ against 100% under NCDP 2007, so it does not restore the 2007 position. (¶¶ 4, 22, 26, 27)
- Provisions constituting the CEA, CERC, State Commissions and APTEL as expert bodies, Electricity Act, 2003Following MSEDCL v. APML and the Constitution Bench in Vivek Narayan Sharma, courts should be slow to interfere with the decisions of these expert bodies. (¶¶ 33, 34)
Held
- The modification of NCDP 2007 has consistently been held a Change in Law; since the SHAKTI Policy likewise reduces the Assured Coal Quantity, it too is a Change in Law, as the three-Judge Bench in Jaipur Vidyut Vitaran Nigam v. Adani Power Rajasthan also recognised, and the restitutionary principle applies to it. The contention that SHAKTI restores 100% coal supply under NCDP 2007 is factually incorrect. (¶¶ 22, 23, 25, 26, 27)
- APTEL's finding that a Change in Law notice under the PPA is not meant to inform procurers of likely cost increases for scheduling decisions, and that MERC's advance-intimation direction was inconsistent with merit order despatch practice, is neither perverse nor contrary to statute. (¶¶ 28, 29)
- Carrying cost from the date of the Change in Law until approval follows from the restitutionary principle in Article 13.2, as APTEL held in Adani Power v. CERC and this Court upheld in UHBVNL v. Adani Power; the contention against it is rejected. (¶¶ 30, 31, 32)
- The issues of computing shortfall relief on actuals against 100% of normative requirement, station heat rate as per Regulations or actuals whichever is lower, and 1 April 2013 as start date are covered by MSEDCL v. APML; the APTEL's view discloses no ignorance of mandatory provisions, extraneous consideration or arbitrariness warranting interference. (¶¶ 18, 19, 33, 34)
Result
Appeals dismissed; APTEL's judgment dated 28 September 2020 upheld; pending applications disposed of; no costs.