RERC Rejects PM-KUSUM Solar Developer’s Compensation Claim Over Substation Shift

RERC Rejects PM-KUSUM Solar Developer’s Compensation Claim Over Substation Shift Photograph: (Archive)

The Rajasthan Electricity Regulatory Commission (RERC) has rejected a compensation claim filed by Ram Krishna Solar Power over alleged losses arising from the denial of a proposed substation change under the PM-KUSUM scheme, while directing state power utilities to process and pay eligible Change-in-Law compensation related to Basic Customs Duty (BCD) and GST hikes.

In its order, the Commission held that Rajasthan Urja Vikas and IT Services Ltd. (RUVITL) and Jodhpur Vidyut Vitran Nigam Ltd. (JdVVNL) were justified in refusing the developer's request to shift connectivity from the originally allotted 33/11 kV Paschimi Jakhro Ki Dhani substation to the newer Umadesar substation. Consequently, the Commission ruled that the developer was not entitled to compensation for losses allegedly incurred due to delayed commissioning and higher transmission losses.

The dispute arose after Ram Krishna Solar Power, a special purpose vehicle established under PM-KUSUM Component-A, sought approval to connect its 1.5 MW solar project in Jodhpur district to the Umadesar substation, located about 1 km from the project site, instead of the originally designated Paschimi Jakhro Ki Dhani substation situated around 4 km away. The developer argued that right-of-way challenges and the availability of a closer substation justified the change and alleged that delays in approval led to significant financial losses.

However, RUVITL contended that the PM-KUSUM bidding process was conducted on a substation-specific basis and that Umadesar was not part of the original Expression of Interest (EOI). The utility argued that allowing a post-award change would undermine the transparency and competitive nature of the bidding process.

Accepting this argument, the Commission observed that the respondents had acted in accordance with the EOI, Letter of Award and Power Purchase Agreement, and therefore could not be held liable for breach of contract.

While denying the compensation claim, the Commission provided relief on the Change-in-Law issue. It noted that the project qualified for compensation arising from the increase in GST on renewable energy equipment and the imposition of BCD on imported solar modules and cells, as the bid submission predated the relevant policy changes and the project was commissioned after the prescribed cut-off dates.

The Commission directed RUVITL and JdVVNL to verify the supplementary bills submitted by the developer and release the admissible compensation within 60 days. Any discrepancies identified during verification must be communicated within 30 days, while payments relating to undisputed amounts cannot be withheld.

RERC further ruled that if the compensation is not released within the stipulated timeline, late payment surcharge (LPS) provisions would become applicable. The surcharge rate would be governed by the lower of the rate specified unde