M/s Devi Energies Pvt. Ltd. vs Arunachal Pradesh State Electricity Regulatory Commission & Ors. on 5 October 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. This appeal is directed against the order dated 20.12.2019 passed by Arunachal Pradesh State Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in appellant’s petition no.TP-06 of 2018 whereby project specific tariff of the appellant’s Dikshi Small Hydro Electric Project (24MW) was determined by the Commission.

2. The facts of the case, stated briefly, are that the appellant had entered into a Memorandum of Understanding (MoU) with the Government of Arunachal Pradesh on 17.03.2011 for development of the above noted Hydro Electric Project. Accordingly, the appellant submitted a Detailed Project Report (DPR) on 14.04.2012 and obtained techno-electric clearance on 10.06.2013.

3. Thereafter, the appellant awarded civil construction work to M/s PK Thungon Builders and entered into an initial contract dated 06.08.2014 with regards to the same. Subsequently, a renegotiated contract dated 01.06.2015 was also entered into by the appellant with the contractor containing revised contractual rates. It needs mention here that the renegotiated contract mentioned reduced rates for certain components of the power project.

4. Vide communication dated 01.03.2018, the Department of Power, Government of Arunachal Pradesh expressed its willingness to buy power of the said power project of the appellant. In pursuance thereto, a Power Purchase Agreement (PPA) was executed between the appellant and Department of Power, Government of Arunachal Pradesh (2nd respondent) on 25.07.2018.

5. The project was subsequently commissioned on 19.09.2019.

6. Meanwhile, the petition no.TP-06 of 2018 came to be filed by the appellant before the Commission seeking determination of tariff for the said hydroelectric power project, from its proposed date of commercial operation as per the Arunachal Pradesh State Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2018, for a period of 35 years. The petition has been disposed of by the Commission vide impugned order dated 20.12.2019 thereby approving the capital cost of the project and determining the generation tariff for the same for supply of power to the 2nd respondent for a period of 35 years for distribution in the State of Arunachal Pradesh.

7. Aggrieved by certain findings of the Commission in the impugned tariff order, the instant appeal has been preferred by the appellant.

8. The main grounds upon which the appellant has assailed the impugned order of the Commission are that the Commission, while determining the tariff for the appellant’s power project has:

(a) adopted a pick and choose method in restricting the cost of civil works to Rs.182.78 crs., as against the Appellant’s claimed expenditure of Rs.235.91 crs. Consequently, despite holding that

the Appellant is not liable to be penalized for time overrun, the Commission has restricted the Interest During Construction (“IDC”) at Rs.41.78 crs. on the admitted hard cost, as against the Appellant’s claim of Rs.52.63 crs.; (b) failed to consider and allow the additional cost impact of the 3 floods encountered by the Appellant during the construction of the Project, on the singular reasoning that the insurance company had settled the corresponding claims of the Appellant for a lesser amount; and

(c) erroneously factored in and deducted subsidy amount of Rs.5 crs. from the capital cost of the Project, despite the Appellant not having received such subsidy from the Ministry of New and Renewable Energy (MNRE).

9. We have heard Ms. Swapna Seshadri, learned counsel for the appellant and Ms. Archana Maharaj, learned counsel for the respondent Commission. We have also perused the impugned order of the Commission and have gone through the written submissions filed by the learned counsels.

10. The submissions of the learned counsel for the appellant can be conveniently divided under the following three heads: -

(I) Reduction in cost of civil works:

It is submitted by the learned counsel for the appellant that the Commission has erroneously allowed only Rs.182.78 crores towards cost of civil works against the claim of the appellant to the tune of Rs.235.91 crores. It is submitted that the Commission has restricted the hard cost to the lower of the cost of each component between the original and negotiated contract entered into by the appellant with the contractor, which is arbitrary and without any basis.

(II) Disallowance of the increase in costs due to three floods:

The learned counsel for the appellant would submit that the Commission has erroneously disallowed the amount incurred in restoration of damage to the power project on account of floods, solely on the ground that the insurance company had settled the claim of the appellant for a lower amount without considering the actual loss suffered by the appellant and actual cost incurred by the appellant on the restoration work.

(III) Deduction of subsidy amount from the capital cost:

It is submitted by the learned counsel for the appellant that the Commission has erroneously deducted Rs.5 crores from the

capital cost despite the fact that the appellant had not received any such amount as subsidy from the Ministry of New and Renewable Energy (MNRE).

11. Even though, the contentions/submissions advanced on behalf of the appellant were sought to be refuted by the learned counsel for the respondent Commission, yet, after advancing arguments for some time, the learned counsel, upon instructions, stated that the case may be remanded back to the Commission for reconsideration. In the written submissions filed on behalf of the Commission also it has been stated in Paragraph no.34 that the case may be remanded back to the Commission for reconsideration.

12. Having regard to the submissions of the appellant’s counsel and in view of such clear-cut statement on behalf of the Commission during the hearing of the appeal as well as in the written submissions, we find it appropriate to remand the matter back to the Commission for fresh consideration on the issues raised in this appeal by the appellant, as noted hereinabove.

13. Accordingly, we hereby, set aside the impugned order of the Commission to the extent assailed in this appeal and remand the matter back to the Commission for fresh consideration on the issues noted hereinabove,

after affording reasonable opportunity of hearing to the parties. The Commission shall endeavor to conclude such exercise within three months from today.

14. The appeal stands allowed, albeit to the extent mentioned hereinabove. All pending IAs, if any, also stand disposed of.

Pronounced in the open court on this the 05th day of October, 2026.

(Virender Bhat)

(Seema Gupta)

Judicial Member

Officiating Chairperson

REPORTABLE / NON-REPORTABLE

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