UPERC gives new lease of life to five BEPL thermal plants | lucknow | Hindustan Times
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UPERC gives new lease of life to five BEPL thermal plants

UPERC quashes power corporation’s unilateral exit from pact with private firm.

lucknow Updated: Jan 11, 2018 17:04 IST
Brajendra K Parashar
The move may boost private developers’ confidence.
The move may boost private developers’ confidence.(Pic for representation)

The UP Electricity Regulatory Commission (UPERC) has given a new lease of life to Bajaj Energy Pvt Ltd’s (BEPL) five thermal power plants that the private developer had to shut down after the UP Power Corporation Ltd (UPPCL) unilaterally terminated power purchase agreements (PPAs) with the company in August last year.

The relief comes ahead of the private investors’ meet scheduled to be held in the state next month. The move may boost private developers’ confidence.

In a landmark judgment, the UPERC on Friday set aside the UPPCL’s decision to exit from the power purchase agreements with regard to the BEPL’s five thermal plants.

The commission, however, ordered reduction of the tariff by around 50 paise per unit. The UPPCL will now purchase electricity from these five plants at this reduced rate of around Rs 7.13 per unit.

However, the regulator has not allowed it the fixed and variable cost as well as the return of equity during the period when the plants were closed.

The commission observed if bilateral contracts were allowed to be terminated at the sweet will of the government or the purchaser or seller, the entire trade and industry structure would collapse. “If such an uncertainty is allowed to prevail, nobody will come for investment in industry,” UPERC chairman SK Agrawal said in the order.

The commission directed BEPL to resume the operation of all the five plants within seven days of receipt of the order.

The BEPL had signed five PPAs with UPPCL to set up as many thermal power plants of 90 megawatt each at its five sugar mills in Barkhera, Khambarkhera, Utraula, Kundarkhi and Maqsoodpur to supply power to the state-owned distribution companies for 25 years.

The plants became operational in March-April 2012 with the UPPCL, on behalf of the discoms, having purchased 11,414 million units of electricity worth over Rs 8,000 crore till termination of the PPAs.

In a sudden move on August 8 last year, the UPPCL issued an exit notice to the BEPL stating that the average rate of power available from the latter’s plants was Rs 7.63 per unit which, it said, was among the highest. The corporation said this rate went against the government’s policy of making affordable power available to consumers under the power for all vision.

The BEPL moved the high court against the unilateral exit notice. On the court’s advice, the company filed a petition in the UPERC for relief.

Having heard a series of arguments and counter arguments from both the sides, the commission in its final order held that the PPAs signed on December 10, 2010 between the two parties had no provision allowing a unilateral exit from the contract. The regulator’s final order was supported by several Supreme Court rulings.

“The respondent’s (UPPCL) decision for exiting from the contract without giving the petitioner the opportunity of being heard cannot be legally justified and hence the five purchase agreements related to five different plants will be treated to have existed in continuity,” the commission said in its judgment.

The commission ruled that petitioner (Bajaj) will not be entitled to return of equity for the period from the date of exit notice and to the date of commission’s order. It said the UPPCL will be entitled to deduct the fixed charges for the intervening period.

Terming the order as a win-win situation for both the parties, UP Rajya Vidyut Upbhokta Parishad president Awadhesh Kumar Verma demanded that the commission pass a supplementary order to ensure that the benefit of the tariff reduction must pass on to consumers.

“The tariff reduction should also come into effective retrospectively since the date of signing of the PPAs,” he demanded.