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SC sets aside ruling allowing compensatory tariff to Tata Power, Adani Power

LiveMint logoLiveMint 11-04-2017 Apurva Vishwanath

New Delhi: In a major blow to Tata Power Ltd and Adani Power Ltd, the Supreme Court on Tuesday set aside an earlier tribunal ruling that allowed the companies to charge compensatory tariff from consumers.

A bench comprising justices Pinaki Chandra Ghose and Rohinton F. Nariman ruled in a batch of appeals filed against a 2016 ruling of the Appellate Tribunal for Electricity (Aptel) which held that an unforeseen increase in the cost of coal would be a “force majeure event” under the power purchase agreements (PPAs) between power generating companies and distributors.

The companies had cited a change in Indonesian regulations in 2010 as a force majeure event that increased the cost of coal imported by Tata Power and Adani Power from that country to fuel their electricity plants.

“The impugned order is set aside. The only benefit we are allowing is if the force majeure event is related to Indian laws,” the court said.

Aptel had directed the decade-long issue to the Central Electricity Regulatory Commission (CERC) to grant relief to Tata and Adani in accordance with the PPAs. The CERC ruling in favour of the power companies will also stand nullified.

Tata Power’s wholly-owned subsidiary Coastal Gujarat Power Ltd (CGPL) and Adani Power’s Mundra project in Gujarat have PPAs with state discoms in Rajasthan, Gujarat, Haryana and Punjab.

A copy of the court’s decision is yet to be made available.

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