Change in Law - The Legal Chamber

Supreme Court Upholds Ruling: Power Generators Must Share Coal Costs Fairly Among All Buyers

11Oct

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Supreme Court

Supreme Court Upholds Ruling: Power Generators Must Share Coal Costs Fairly Among All Buyers

The Supreme Court dismissed appeals against concurrent orders of CERC and APTEL. It upheld that coal linkage for a power plant is allocated to the project as a whole, not to specific PPAs. Consequently, the additional cost from 'Change in Law' events must be apportioned pro-rata among all power procurers based on their energy drawal. Facts Of The Case: GMR Kamalanga Energy Limited (GKEL) set up a power plant and entered into long-term Power Purchase Agreements (PPAs) with three utilities: Haryana, Odisha (GRIDCO), and Bihar. The project was allocated coal from specific linkages and a captive block, intended for the entire plant. When changes in law and a coal supply shortfall increased GKEL's costs, it sought compensation. The Central Electricity Regulatory Commission (CERC) ruled GKEL w...

What Qualifies as ‘Goods’? Supreme Court Explains Why a Power Plant Isn’t Eligible for Export Benefits

The Supreme Court held that a press release announcing a policy change does not constitute a "Change in Law" under a Power Purchase Agreement, as only duly promulgated notifications have legal force. It further ruled that deemed export benefits under the Foreign Trade Policy are inapplicable to immovable, integrated power plants, as the policy is designed for movable "goods" and requires strict adherence to defined supply and procurement conditions. Facts Of The Case: The case involved appeals by Nabha Power Limited and Talwandi Sabo Power Limited against the Punjab State Power Corporation Limited (PSPCL). The dispute arose from a Power Purchase Agreement (PPA) executed following a tariff-based competitive bidding process. The appellants claimed that post-bid notifications from the...

Supreme Court Late Payment Surcharge Valid: Coal India’s Levy Ruled as ‘Change in Law’

The Supreme Court upheld the Appellate Tribunal for Electricity's (APTEL) ruling that a Coal India Limited (CIL) notification imposing Evacuation Facility Charges (EFC) constitutes a "change in law" event under the Power Purchase Agreement (PPA). The judgment affirmed that the power generator is entitled to compensation from the notification date with carrying cost at Late Payment Surcharge (LPS) rates on a compounding basis, based on restitutionary principles. The Court clarified that only a substantial question of law is appealable, and the supplementary bill is required only after due adjudication. Facts Of The Case: A Power Purchase Agreement (PPA) was signed on January 28, 2010, between Rajasthan Discoms and Adani Power Rajasthan Ltd. for 1200 MW. On December 19, 2017, Coal India ...