According to reports, finding the ‘solar purchase order’ brought in by the Tamil Nadu Electricity Regulatory Commission (TNERC) “discriminatory”, the Appellate Tribunal for Electricity (APTEL) has observed that the state regulator merely “has simply tried to implement the directions of the State government”.
In its judgement pronounced on January 21, made public today, APTEL has said that “the State Commission being an independent statutory authority is not bound by any policy directions which hamper its statutory functions.”
APTEL’s order, which sets aside TNERC’s solar order, is seen by the industry as a setback to the development of solar power in the state.
On October 19, 2012, the Tamil Nadu government came out with its ‘solar policy’, which sought to create 3,000 MW of solar power capacity in the State by 2015. The cornerstone of the order was the ‘solar purchase obligation’. Specified categories of consumers needed to get 6 per cent of their consumption (3 per cent in the first year) from solar power plants. This SPO therefore was expected to create a demand for solar power, and was generally hailed as a model for other states to emulate.
The TN Government’s ‘policy directive’ was issued under Section 108 of the Electricity Act, 2003, which empowers State Governments to issue such directives “in matters of policy involving public interest.” In directives under the sections, the state regulatory commission “shall be guided by” the State Government and if there is a question about what is a matter of public interest, “the decision of the State government shall be final.”
Consequent to this, TNERC issued a suo moto order, entitled ‘Issues relating to Tamil Nadu Energy Policy, 2012,” which in effect, technically expanded the State Government’s solar policy.
This order has been set aside by APTEL.
Two technical points clearly emerge out of APTEL’s judgement. The first is that the imposition of the SPO is discriminatory. “The State Commission should not have fastened the Solar Purchase Obligation (SPO) directly on some categories of consumers of TANGEDCO,” the judgement says. It goes on to note that the Section 86(1)(e) of the Electricity Act empowers the State Commission to specify purchase of electricity from renewable sources of energy as a percentage of total consumption of electricity in the area of a distribution licensee. “Thus, the State Commission has to specify the RPO/SPO on the total consumption of the distribution licensee and not selectively and directly on some categories of consumers of the distribution licensee.”
Secondly, APTEL has disagreed with the contention of TANGEDCO that RPO and SPO are consistent with each other. TANGEDCO had argued that the ‘renewable purchase obligation’ (under the central RPO Regulations, 2010) of 0.05 per cent of solar energy purchases was valid until a new order for solar obligation, viz., the solar order 2013, was issued. “After the coming into effect of the solar order envisaging the SPO, the 0.05 per cent of SPO under the (central) RPO ceases to have effect,” said TANGEDCO.
Disagreeing with this, APTEL observed that “the obligated consumer under SPO is different from the obligated consumers under RPO Obligation Regulations, 2010, which includes the distribution licensee.” It also pointed out that TNERC itself had said in its submissions before APTEL that RPO and SPO were different.
“The State Commission had no power to issue an SPO order as per the directions of the State Government under section 108 (of the Electricity Act) in addition and contrary to RPO obligations specified in the RPO Regulations 2010,” APTEL said.
The State Commission has to consider the directions of the State Government under section 108 in the matter of discharge of its functions under the Act and “not in a general way outside the functional scope of the Act,” it said.