HARYANA POWER GENERATION CORPORATION LIMITED vs HARYANA ELECTRICITY REGULATORY COMMISSION & Anr on 8 July 2026

JUDGEMENT

PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON

1. The captioned appeal No. 306 of 2016 has been filed by Haryana Power Generation Corporation Ltd. (“Appellant/HPGCL”), challenging the order dated 31.03.2016 passed by Haryana Electricity Regulatory Commission (hereinafter referred “HERC/State Commission”) in Case No. HERC/PRO-30 of 2015, along with Review Order dated 29.06.2016 passed in Case No. HERC/RA-1 OF 2016. Since the Review Order dated 29.06.2016 stands merged with the Order dated 31.03.2016, both orders are hereinafter collectively referred to as the “Impugned Order”. Description of Parties: -

2. The Appellant - Haryana Power Generation Corporation Limited is a company incorporated under the Companies Act, 1956 and has succeeded to the generation functions of the Haryana State.

3. The Respondent No. 1- State Commission is the Electricity Regulatory Commission for the state of Haryana. The Respondent No. 2 – the Haryana Power Purchase Centre (HPPC) is the nodal agency for state power distribution companies i.e., Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) and is responsible for procuring and managing power supplies for the entire state of Haryana. Factual matrix of the Case: -

4. In terms of the HERC (Terms and Conditions for Determination of Tariff for Generation, Transmission, Wheeling and Distribution & Retail Supply under Multi

Year Tariff Framework) Regulations, 2012,(hereinafter referred as “MYT Regulations, 2012”), Appellant filed Petition No. HERC/PRO-30 of 2015 on 19.11.2015 for approval of True-up for (i) FY 2014-15, (ii) Mid-Year Performance Review for FY 2015-16, and (iii) determination of Generation Tariff for FY 2016- 17 in which State Commission passed the Tariff Order on 31.03.2016. Aggrieved by certain findings, the Appellant filed Review Petition (Case No. HERC/RA-1 of 2016) on 02.05.2016. The State Commission vide Order dated 29.06.2016, partly allowed the Review Petition i.e. allowing the Appellant's claims on True-up of O&M Expenses and R&M Expenses (partly) but upheld the direction for refund of Rs. 64.45 Crore on account of excess recovery of fixed charges for FY 2014-15 in respect of three generating stations, as detailed below: Aggrieved thereby, the Appellant has filed present Appeal. ANALYSIS AND DISCUSSION Appellant has raised following issues for adjudication in the present Appeal: Issue I: Direction to refund Fixed Costs for Plants less than 10 years. Issue II: Truing-Up of fixed costs without considering Force Majeure conditions. Generating Station Units Approved AFC (Rs. Cr.) Approved PLF (%) Excess Recovery (Rs. Cr.) DCRTPP, Yamuna Nagar Unit No. 1 & 2 (300 MW each) 464.05 85% 19.44 RGTPP, Hisar Unit No. 1 & 2 (600 MW each) 846.36 85% 45.21 WYC Hydel, Yamunanagar 8 machines (46.4 MW effective) 20.76 50% (-) 0.20 TOTAL 1331.17 64.45

Heard, Ms Ritu Apurva and Mr Anand Ganeshan, Learned Counsel appearing on behalf of the Appellant, Mr Shubham Arya, Learned Counsel appearing on behalf of Respondent No 2, perused written submissions filed by parties, Impugned Order and other documents on record. Issues are deliberated in following paragraphs ISSUE I: DIRECTION TO REFUND FIXED COSTS FOR PLANTS LESS THAN 10 YEARS. SUBMISSIONS URGED ON BEHALF OF APPELLANT

5. It is submitted that State Commission has wrongly calculated recoverable capacity charge for RGTPP and DCRTPP for FY 2014-15. The Regulation 30(c)(i) of the MYT Regulations, 2012 prescribes a specific and distinct formula for recovery of annual fixed charges for generating stations in commercial operation for less than ten (10) years on 1st April of the financial year, which has been overlooked by the State Commission. In terms of these Regulations, DCRTPP (COD: 24.06.2008) and RGTPP (COD: 01.03.2011) shall fall in this category. The formula prescribed in MYT Regulations 2012 is identical in substance to Regulation 21(2) of the Central Commission's Tariff Regulations, 2009, which was consistently applied by the Central Commission during that period. The Statement of Reasons issued by CERC for the 2009 Tariff Regulations dated 03.02.2009 expressly recognizes the distinction between younger and older stations and is consciously conceived to balance incentives and disincentives based on the stage of operational life of a plant.

6. The Appellant submits that State Commission has also misconstrued the term "pro-rata". As clarified in the Statement of Reasons, "pro-rata" does not imply strict linear proportionality, rather it denotes variation in proportion to another variable. Regulation 30(c)(i) fully satisfies this requirement, as capacity charges vary proportionately with monthly availability. The interpretation of “pro rata” which results in a conflict with another Regulation is contrary to the settled principle of interpretation that both provisions need to be harmoniously construed. It cannot be that a provision in a particular statute is termed as bad as there is a conflict with another provision in the very same statute.

7. State Commission's finding that Regulation 30(c)(i) is merely a monthly computation mechanism, and yearly capacity charges would be recovered as per Regulation 30 (a), is contrary to the plain language of Regulation 30(c)(i), which expressly provides for annual correction through its proviso. The contention of respondents that the plant with zero annual PAF would recover 50% of AFC under Regulation 30 (c), is factually and mathematically incorrect as with PAFY= 0, the proviso yields zero recovery, thus there is no conflict with Regulation 30(a). The Appellant further contends that The State Commission's characterization of Regulation 30(c)(i) as an 'aberration' is legally untenable and contrary to established principles of statutory construction. Regulation 30(c)(i) constitutes a special provision governing the computation of AFC for generating stations that are less than ten years old and, therefore, in accordance with the settled principle that a special provision prevails over a general provision. SUBMISSIONS URGED ON BEHALF OF RESPONDENT No 2- HPPC

8. It is submitted that Regulation 30(a) is the governing provision for determination of annual fixed charge recovery for all thermal generating stations,

irrespective of their age or date of commissioning. Regulation 30(c)(i), on the other hand, is a monthly computation mechanism that uses the notations “for a calendar month”, making it plain that it governs only monthly payments. The State Commission has therefore, correctly applied Regulation 30(a) for the annual determination and is right in holding that Regulation 30(c)(i) operates only as the monthly billing mechanism.

9. HPPC further submits that the Appellant's interpretation of Regulation 30(c)(i) is contrary to Regulations 30(a) and proviso in 30(c)(i). HPPC submits that if PAFM is 100% every month and then the availability factor would be 0.5+0.5 x (100/85) = 0.5+0.5x 1.1765 +0.5+0.5882 = 1.0882. The above cumulatively would give a much higher capacity charge recovery then what would be admissible at 85% availability prescribed in Regulation 30(a) i.e. 0.5+0.5 x (85/85) = 0.5+0.5x 1.1765 + 0.5+0.5882 = 1. Further, the formula in Regulation 30(c)(i) also conflicts with the proviso to Regulation 30(c)(i) at zero availability: while the proviso rightly yields zero recovery, the main formula would yield 50% recovery at zero availability. Harmonious construction requires reading Regulation 30(c)(i) to be confined to monthly mechanism only and cannot be applied to annual determination.

10. In any event, notwithstanding the amounts paid during individual month, at the end of financial year, the fixed charges are adjusted to the extent of PLF actually achieved i.e. to the extent of 78% for DCRTPP and 76.34 % for RGTPP 1-2 as indicated in the appeal.

11. Reliance has been placed on the settled principle that literal interpretation cannot be employed where it leads to absurdity or inconsistency as held in

[Kuldip Nayar v. Union of India, (2006) 7 SCC 1. Departure from literal interpretation is permissible only where the natural meaning leads to repugnance, inconsistency, or absurdity. [Kehar Singh v. State (Delhi Admn.), (1988) 3 SCC 609, (Paras 231-232, 238-239); Maulavi Hussein Haji Abraham Umarji v. State of Gujarat, (2004) 6 SCC 672.

12. HPPC further submits that Regulations 80 and 81 of the MYT Regulations, 2012 empower the State Commission to interpret the Regulations and adopt an appropriate procedure to safeguard consumer interest. OUR CONSIDERATION

13. The central issue for adjudication is whether recovery of Annual Fixed Charges for the generating stations DCRTPP and RGTPS Units 1 & 2, which had completed less than ten years of commercial operation as on 1st April 2014, ought to be governed by Regulation 30(c)(i) or Regulation 30(a) of the MYT Regulations, 2012. The Appellant has urged that Regulation 30(c)(i) is a specific provision enacted to deal with plants within ten years of commercial operation, and therefore the computation of fixed charges must be made strictly in terms thereof. It is not disputed that for FY 2014-15, DCRTPP achieved an annual availability of 78.00% and RGTPS Units 1 & 2 achieved 76.34% against the prescribed normative annual availability of 85%.

14. In the Impugned Order dated 31.03.2016, annual fixed charges have been worked out on prorate basis in terms of Regulation 30 (a) considering actual availability less than NAPAF. In the Impugned review order dated 29.06.2016, after extracting the entire Regulation 30, it has been held that it is the Regulation

30 (a) which governs recovery of annual charges for these plants. It has been further held that the “Proviso of Regulation 30 (c)i is a non obstante clause and cannot be read harmoniously with Regulation 30 (a) because with annual PLF zero, a thermal plant less than 10 years old will get 50 % annual fixed charges as per said proviso to Regulation 30 (c)(i), whereas as per Regulation 30 (a) it is entitled to get zero capacity charge. So there is an aberration in Regulation 30

(c) (i) and this aberration has come to the notice of commission only now and shall be addressed while framing/ notifying MYT regulations for the next control period”….. .

15. It is relevant to extract the applicable provisions of the Haryana Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2012 ("MYT Regulations, 2012"), which govern the issues arising in the present Appeal. The relevant Regulations are reproduced hereunder for ready reference: 30 RECOVERY OF ANNUAL FIXED CHARGES (CAPACITY) CHARGES FOR THERMAL POWER PROJECTS

(a) A generating plant shall recover full capacity charge at the normative annual plant availability factor specified for it by the Commission. Recovery of capacity charge below the level of target availability shall be on pro-rata basis. No capacity charge shall be payable at zero availability; (b) Payment of capacity charge by the beneficiaries shall be on monthly basis in proportion to allocated / contracted capacity. The total capacity charges payable for a generating plant shall be shared by its beneficiaries as per their respective percentage share / allocation in the capacity of the generating plant;

(c) The capacity charge payable to a thermal generating plant (in Rs.) for a calendar month shall be calculated in accordance with the following formula:

(i) Generating plants in commercial operation for less than ten (10) years on 1st April of the financial year: AFC x (NDM / NDY) x (0.5 + 0.5 x PAFM / NAPAF)

Provided that in case the plant availability factor achieved during a financial year (PAFY) is less than 70%, the total capacity charge for the year shall be restricted to AFC x (0.5+ 35/NAPAF) x (PAFY/70)

(ii) For generating plants in commercial operation for ten (10) years or more on 1st April of the financial year: AFC x (NDM/NDY) x (PAFM/NAPAF) Where, AFC = Annual fixed cost specified for the year, in Rupees. NAPAF = Cumulative Normative annual plant availability factor in percentage NDM = Number of days in the month NDY = Number of days in the year PAFM = Plant availability factor achieved during the month, in percent: PAFY = Plant availability factor achieved during the year, in percent Note: Until Intra - State ABT is implemented, Plant Availability Factor (PAF), wherever mentioned, shall mean Plant Load Factor (PLF). For working out annual PLF for the purpose of recovery of annual fixed charges, deemed generation on account of backing down on the instructions of SLDC or on the request of Discoms shall be included.”

16. From the perusal of Regulation 30, it is evident that for plants which have completed less than 10 years of commercial operation, there is a special category for calculation of monthly fixed charges under Regulation 30 (c)(i) and its proviso deals with capping of annual fixed charges in case availability achieved is less than 70 %.

17. We therefore, find considerable merit in the submission of the Appellant. Regulation 30(c)(i), read with its proviso, is not confined to a monthly computation mechanism but expressly contemplates annual correction based on the Plant Availability Factor for the year (PAFY). The respondents’ contention as well as observations in the Impugned Review Order that a generating station with zero annual PAF would yet recover fifty percent of the Annual Fixed Charges (AFC)

under Regulation 30(c) is factually and mathematically unsustainable, for the proviso yields zero recovery when PAFY equals zero and as such proviso becomes applicable as soon as PAFY falls below 70 %. Thus, there is no inconsistency with Regulation 30(a). -

18. Regulation 30(c)(i) constitutes a special provision applicable to generating stations less than ten years old. The legal maxim, generalia specialibus non derogant, is squarely applicable; each enactment must be construed in that respect according to its own subject-matter and its own terms. special provision prevails over a general one as per the settled statutory construction, (South India Corporation v. Secretary, Board of Revenue, AIR 1964 SC 207; J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. State of U.P., AIR 1961 SC 1170). This principle has also been applied to resolve any conflict between general and special provisions in the same legislative instrument, and it has been held that in case of conflict, between a special provision and a general provision, the special provision prevails over the general provision, and the general provision applies to such cases which are not covered by the special provision. (Kureti Venkateswarlu, President v. State of Andhra Pradesh, 1970 SCC OnLine AP 33).

19. It is well settled that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner [ Chandra Kishore Jha v. Mahavir Prasad [(1999) 8 SCC 266 : AIR 1999 SC 3558] (SCC para 17 : AIR para 12), Dhanajaya Reddy v. State of Karnataka [(2001) 4 SCC 9 : 2001 SCC (Cri) 652 : AIR 2001 SC 1512] (SCC para 23 : AIR para 22), NTPC Ltd. v. CERC & Ors. (Judgment in Appeal No. 125 of 2017

dated 09.05.2019), NTPC Ltd v. CERC & Ors. (Order in Appeal No 93 of 2017 dated 29.01.2020]. Therefore, the general statute is read as silently excluding from its operation the cases which have been provided for by the Special one. (Maxwel on the Interpretation of Statutes, Eleventh Edition, page 168). In the present case, the Commission’s characterization of Regulation 30(c)(i) as an ‘aberration’ is legally untenable, for no provision of delegated legislation can be treated as surplusage unless irreconcilable, and courts are bound to give effect to every word of the statute (Aswini Kumar Ghose v. Arabinda Bose, AIR 1952 SC 369).

20. We are therefore, of the view that Regulation 30(c)(i) governs the computation of AFC for such stations which are operating for less than 10 years from its commercial operation date , and its operation cannot be diluted by resort to Regulation 30(a). In addition, it has been brought to our notice that Regulation 30(c)(i) of the MYT Regulations, 2012, is identical to Regulation 21(2) of the Central Commission’s Tariff Regulations, 2009, a fact not disputed by Respondents, and same has been consistently applied by the Central Commission during that period. The Statement of Reasons issued by the Central Commission for the 2009 Tariff Regulations issued on 03.02.2009, explains the rationale for prescribing different incentive/disincentive structures for stations younger than 10 years and those older than 10 years as noted hereunder: “…………………………………. 25.19 With regard to incentive/disincentive rate to be adopted, we are of the view that following aspects are important in this regard: If the disincentive could be in the form of denial of normative fixed charge for availability lower than the normative then the incentive could be in the form of additional fixed charge for availability in higher than the normative. As such, recovery of fixed charge shall be on monthly basis and shall be inclusive of any incentive and disincentive depending upon the availability

achieved during the month. This is a departure from the earlier practice of recovery of fixed charges linked to cumulative availability. This would allow the beneficiaries to meet any shortfall in availability (due to station being out partially or full) be met from sourcing supplies from alternate sources or over drawal from the grid at UI rates. It would be easier for the new generating station to achieve the availability above normative whereas as the station become old it would be more credit worthy for the station to achieve availability above the normative. As such, rate of incentive should be more for stations which are in operation for more than 10 year from the COD in terms of normative fixed charge as compared to new stations which are in operation for 10 year or less from the COD. The incentive and disincentive should be symmetrical in the normal operating range. For a thermal generating station normal operating range could be considered as station availability of 70% and above. However, availability of less than 70% should not be acceptable and should be accompanied with denial of fixed charges on pro-rata basis. Since the recovery of fixed charges is based on monthly availability actual picture would become clear only at the end of the year and hence correction of incentive at the end of year in case annual availability achieved is lower than 70% is being allowed.”

21. The Regulation 30 (a) and 30 (c) of MYT Regulations 2012 is mathematically evaluated for RGTPS 1 &2 plant for above preposition considering AFC = Rs 846.36 Crore, NAPAF = 85 % as noted in the Impugned Order. For the sake of simplicity and ease of understanding, it has been assumed that the plant achieves uniform monthly availability throughout the financial year, resulting in the same annual availability corresponding to each scenario. This assumption has been adopted solely to facilitate the mathematical demonstration of the working of Regulations 30(a) and 30(c). A) Plants Less than 10 years of commercial operation (applying formula as per Regulation 30 (c) (i). Case 1 : Monthly availability 85 %, Annual Availability 85 %

Month 1(April)

Total (annual) Days

Monthly Fixed Charges 69.56 71.88 69.56 71.88 71.88 69.56 71.88 69.56 71.88 71.88 64.93 71.88 846.36 Case 2 : Monthly availability 70 %, Annual Availability 70 % ( Disincentive ) Month 1(April)

Total( annual) Days

Monthly Fixed Charges 63.43 65.54 63.43 65.54 65.54 63.43 65.54 63.43 65.54 65.54 59.20 65.54 771.68 Case 3 : Monthly availability 65 %, Annual Availability 65 % ( Disincentive) Month 1(April)

Total (annual) Days

Monthly Fixed Charges 61.38 63.43 61.38 63.43 63.43 61.38 63.43 61.38 63.43 63.43 57.29 63.43 746.79

22. However, in the present case 3, by applying formula in proviso of Regulation 30(c)(i), the annual fixed charges gets restricted to Rs 716.56 Crore. Case 4 : Monthly availability 90 %, Annual Availability 90 % - Incentive Month 1(April)

Total (Annual) Days

Monthly Fixed Charges 71.61 74.00 71.61 74.00 74.00 71.61 74.00 71.61 74.00 74.00 66.84 74.00 871.25

B) Plants more than 10 years of commercial operation (applying formula as per Regulation 30 (c) (ii). Case 1 : Monthly availability 85 %, Annual Availability 85 % Month 1(April)

Total (annual) Days

Monthly Fixed Charges 69.56 71.88 69.56 71.88 71.88 69.56 71.88 69.56 71.88 71.88 64.93 71.88 846.36 Case 2 : Monthly availability 70 %, Annual Availability 70 % ( Disincentive ) Month 1(April)

Total (annual) Days

Monthly Fixed Charges 57.29 59.20 57.29 59.20 59.20 57.29 59.20 57.29 59.20 59.20 53.47 59.20 697.00 Case 3 : Monthly availability 65 %, Annual Availability 65 % ( Disincentive) Month 1(April)

Total (annual) Days

Monthly Fixed Charges 53.20 54.97 53.20 54.97 54.97 53.20 54.97 53.20 54.97 54.97 49.65 54.97 647.22 Case 4 : Monthly availability 90 %, Annual Availability 90 % - Incentive Month 1(April)

Total (annual) Days

Monthly Fixed Charges 73.66 76.11 73.66 76.11 76.11 73.66 76.11 73.66 76.11 76.11 68.75 76.11 896.15

C) Annual Fixed cost calculated as per Regulation 30 (a), prorate basis PFAY 70 % , Annual Fixed Cost = Rs 697 Crore PFAY 65 % Annual Fixed Cost = Rs 647.22 Crore

23. It is evident from the above mathematical computation that in both scenarios—Scenario A (plants less than ten years old under Regulation 30(c)(i)) and Scenario B (plants beyond ten years under Regulation 30(a) or 30(c)(ii))— the annual fixed cost remains the same for the achieved availability of 85%. Under Scenario A, the disincentive in AFC recovery below 70% availability is moderated, and the incentive above normative availability is also correspondingly limited. The proviso to Regulation 30(c)(i) expressly caps recovery when availability falls below 70%, thereby ensuring consumer protection while allowing moderated recovery for newer plants.

24. In contrast, under Scenario B, for plants beyond ten years of commercial operation, the incentive and disincentive are sharper, whether computed under Regulation 30(c)(ii) or Regulation 30(a) on a pro-rata basis. This differentiation is deliberate, reflecting the rationale articulated in the Statement of Objects and Reasons to the CERC Tariff Regulations, 2009, which recognized the need to balance recovery for newer plants against consumer interest.

25. We also do not find any merit in the contention of the respondents that the Appellant’s interpretation of Regulation 30(c)(i) is contrary to Regulation 30(a) and its proviso, merely because if PAFM were 100% every month, the availability factor would mathematically yield 1.0882 as compared to the normative 85% availability prescribed in Regulation 30(a). It is evident from above mathematical

calculations for NAFM 90 %, that the calculation of annualised fixed charges yield different incentives for the same NAFM for plants with less than 10 years of commercial operation and more than 10 years of commercial operation, and same can be extrapolated for NAFM of 100 %, which squarely fits into the rational explained in the Statement of Reasons as noted above. As per Regulation 30 (a), the generating company shall recover full capacity charge at Normative Plant Availability factor, which is found to be same under both the scenarios as per Regulation 30 (c) also, as noted above. As per applicable regulatory scheme, for plants with less than 10 years of commercial operation, separate formula has been given for computation of monthly and annual fixed capacity charges and in case annual availability falls below 70 %, the annual fixed charges gets capped as per formula prescribed under the proviso of Regulation 30(c) (i). As such, computational anomalies, if any, cannot override the express text of a special provision, nor justify its displacement by a general clause. The correct interpretive approach is to give effect to Regulation 30(c)(i) in its entirety, harmonizing it with the broader scheme, rather than nullifying it under the guise of anomaly.

26. We therefore hold that Regulation 30(c)(i) constitutes a specific provision for generating stations with less than ten years of commercial operation, and its operation must be harmonized with Regulation 30(a) and 30(c)(ii). One provision of the regulation cannot be construed to render another otiose; each must be given effect in its proper sphere. The mathematical scheme corroborates the regulatory intent, and the differentiation between younger and older plants is rational, consistent with the objectives of the Tariff Regulations.

27. Since the underlying principles were consciously adopted and replicated in the State Commission’s MYT Regulations, 2012 in Regulation 30(c)(i), the Commission cannot, under the guise of interpretation, rewrite the regulation. Moreover no aberration in Regulation 30(c)(i) has been demonstrated as noted in the Impugned Review Order . The reliance placed by the respondents on Kuldip Nayar v. Union of India, (2006) 7 SCC 1 (para 201); Kehar Singh v. State (Delhi Admn.), (1988) 3 SCC 609 (paras 231–232, 238–239); and Maulavi Hussein Haji Abraham Umarji v. State of Gujarat, (2004) 6 SCC 672 (paras 21–23) is misplaced, as those authorities pertain to constitutional interpretation and legislative intent, whereas the present case involves the construction of specific tariff regulations where the text and scheme are clear.

28. In view of the foregoing deliberations, the findings in the Impugned Order that annual fixed charges are to be calculated as per Regulation 30(a) for RGTPP Units 1 & 2 and DCRTPP, which have not completed ten years of commercial operation, are set aside. It is held that monthly and annual fixed charges for these plants shall be calculated in terms of Regulation 30(c)(i). The matter is accordingly remanded to the State Commission to work out the annual fixed charges in the above terms. ISSUE II: TRUING-UP OF FIXED COSTS WITHOUT CONSIDERING FORCE MAJEURE CONDITIONS. SUBMISSIONS URGED ON BEHALF OF APPELLANT

29. Appellant submits that RGTPP Unit-II remained unavailable from October 2013 to June 2014 due to a turbine failure. The OEM (SEC Ltd., China) required the machine to be transported to China for repairs, resulting in an unavoidable outage that squarely falls within the Regulation 3.23(vi) of the MYT Regulations,

2012, which recognizes shutdowns required to avoid serious and immediate risk of equipment failure as force majeure. The State Commission, by its Order dated 27.03.2015 passed in the True-up for FY 2013-14, had expressly acknowledged that the station faced significant operational constraints beyond the control of the Appellant and that the Appellant made earnest and bona fide efforts to mitigate the issues. The Appellant contends that the subsequent reversal of this finding, as recorded in the impugned order, without fresh material is arbitrary and violates the doctrine of legitimate expectation and principles of regulatory consistency.

30. Appellant submits that the State Commission, with respect to WYC Hydel, in the Order dated 27.03.2015, acknowledged the technical incapacity and force- majeure type limitation affecting the station and had relaxed the normative PLF to 50% of available capacity (46.4 MW) for FY 2015-16. This recognition of the inherent limitations of the WYC Hydel machines (which have outlived their designed life) should equally apply to the computation of fixed charges for FY 2014-15.

31. The Appellant submits that although the Regulations do not specifically provide for PLF relaxation in respect of foreign-manufactured equipment, the MYT framework empowers the State Commission to grant relaxation where performance shortfalls arise from uncontrollable factors such as OEM-related failures, non-availability of spares, or specialized repair requirements.

32. With regard to Respondent’s contention that order dated 27.03.2015 attained finality because it was not challenged is legally untenable. The mere absence of an appeal does not convert an incorrect finding into a correct one. It is settled law that an erroneous order cannot attain legality solely by remaining unchallenged. Legality of order must be tested on its merit.

SUBMISSIONS URGED ON BEHALF OF RESPONDENT No 2- HPPC

33. It is submitted that Plant Load Factor / Plant Availability Factor is expressly classified as a 'controllable item' under Regulation 8.3(b) of the MYT Regulations, 2012, therefore, such equipment breakdown does not fall under force majeure and loss incurred by the same cannot be passed on to the Discoms and consumers of Haryana.

34. RGTPP Unit-2 suffered from inherent turbine problems since commissioning. A mechanical failure arising from inherent design deficiencies or maintenance lapses cannot constitute 'force majeure' under Regulation 3.23, as noted in multiple prior orders (including Order dated 13.10.2014 in Case No. HERC/PRO-13 of 2014 and the Order dated 29.05.2014 in Case No. 39 of 2013).

35. It is submitted that Appellant has misconstrued the nature and scope of the finding in the Order dated 27.03.2015 as the said order dealt with HPGCL's petition for True-up for FY 2013-14, and Tariff Determination for FY 2015-16 in which State Commission noted that HPGCL made earnest efforts to bring back the machine in service, the State Commission, however, did not relax the PLF for FY 2014-15.

36. With regard to WYC Hydel, the State Commission has noted that the WYC Hydel machine have outlived their useful life and the efficiency has gone down considerably and while noting that HPGCL has not taken timely actions for maintenance, the State Commission determined the PLF at 50% for WYC Hydel for FY 2015-16. These observations did not amount to a general relaxation of fixed charge recovery norms or grant any relief from refund of excess fixed charges for FY 2013-14 or FY 2014-15.

37. The State Commission in the Review Order has held that in regard to the RGTPS Units no relaxation can be granted in the normative PLF as far as recovery of fixed charges is concerned". It has been further clarified that a relaxed PLF of 70% had been approved for RGTPP in FY 2013-14 " for the limited purpose of working out target generation and fuel cost" by relying on the Generation Tariff Order dated 29.03.2013 for FY 2013-14 Furthermore, in the same order dated 29.03.2013, the State Commission had stated that "non- availability of a generating station for a prolonged period imposes significant cost on the electricity consumers of Haryana in terms of loss of productivity or substituting the same with short term expensive power or prohibitively expensive CPP running on liquid fuel.

38. It is further submitted that the Appellant had separately filed Case No. HERC/PRO-13 of 2014 seeking recovery of fixed charges for shutdown of RGTPP Unit-2 and recovery at actual PLF for FY 2014-15, which was rejected by the State Commission vide Order dated 13.10.2014 (in Petition 39 of 2013) and same has been reproduced in the Review Order. CONSIDERATION AND OUR VIEW

39. The issue involved is with regard to relaxation in the plant availability factor for RGTPP Unit-II, which remained unavailable from October 2013 to June 2014 due to a turbine failure for the year under consideration i.e. FY 2014-15, especially when State Commission in its order dated 27.03.2015 passed in the True-up for FY 2013-14, had expressly acknowledged that the station faced significant operational constraints beyond the control of the Appellant and that the Appellant made earnest and bona fide efforts to mitigate the issues. It has been

contended on behalf of Appellant that Regulation 3.23(vi) of the MYT Regulations, 2012, recognizes shutdowns required to avoid serious and immediate risk of equipment failure as force majeure.

40. State Commission Order dated 27.03.2015, referred by Appellant pertains to True up of FY 2013-14 and it has been observed by State Commission, that that low PLF for RGTPS unit 1 & 2 during FY 2013-14 and FY 2014-15 were not in control of petitioner and petitioner has made sincere efforts to bring back the machines in service in minimum possible time. However, our attention has been drawn by Respondent that though State Commission appreciated the efforts of Appellant, yet for the FY 2013-14, no relaxation in plant Availability factor was granted for RGTPS. We refrain from making any observations on the said order dated 27.03.2015 as it is not under challenge before us, however it is clear that in spite of such favorable observation, no relaxation in PLF was granted for the FY 2013-14 . Moreover, it is informed that for FY 2013-14, the low PLF arose due to same circumstances i.e Rotar failure, like for the FY 2014-15, Appellant chose not to challenge the order dated 27.03.2015 and same has attained finality as far as FY 2013-14 is concerned for identical circumstances.

41. Our attention has also been drawn towards State Commission’s Order dated 29.03.2013, in case No HERC /PRO -25 of 2012 for approval of Generation tariff of HPGCL for the FY 2013-14, in which it is observed that RGTPS has been able to achieve low PLF ( 27.65 % for Unit 1 and 75.84 % for unit 2) during FY 2012-13, Appellant itself has initially proposed a PLF of 80% for FY 2013-14 for these plants, which was subsequently revised to 70 %. However, State Commission in the said order considered the PLF of 70 % only for the purpose of

working out target generation, while keeping the PLF at 85 % for full recovery of fixed cost.

42. Therefore, there is no substance/merit in the contention of Appellant with regard to violation of doctrine of legitimate expectation and principles of regulatory consistency based on observation of State Commission in the order dated 27.03.2015.

43. Appellant has relied upon Regulation 3.23 (vi)to contend that outage of RGTPS unit in FY 2014-15 would fall in the category of Force Majeure which reads as “ any shut down or interruptions, which is required to avoid serious and immediate risks of a significant plant or equipment failure”. It is however observed from the order dated 27.03.2015 passed by State Commission in Petition No HERC/PRO-61 of 2014 for True up of FY 2013-14, that RGTPS (1&2) plant has achieved low PLF since commissioning; 52.73 % ( FY 2011-12 ); 47.50 % ( FY 2013-14); 41.69 % ( FY 2013-14) and no documentary evidence has been placed by Appellant if any relaxation was granted to RGTPS in these years. As such these PLF figures for RGTPS plant since commissioning do establish, that these units have been facing low PLF since commissioning on several accounts like machine issue, coal supply and quality of coal and low PLF in FY 2014-15 does not seem to be an exception. Furthermore, the outage during the period under consideration is on account of machine issue that these plants are facing since commissioning.

44. It is a settled principle that the responsibility for procurement of quality equipment, whether sourced domestically or imported, rests squarely upon the generating company. The generating company having undertaken to establish and operate the generating station, assumes the obligation to ensure that

machinery and components are of requisite quality, fit for purpose, and maintained in accordance with prudent utility practices. The Regulations contemplate plant availability as a controllable parameter, and the generator cannot shift the burden of equipment failure onto consumers or the regulatory framework. The choice of supplier, whether indigenous or foreign, is a commercial decision of the generator, and the attendant risks of quality, reliability, and timely replacement are to be borne by it. Unless the failure is demonstrably attributable to external uncontrollable causes, the generator remains accountable for ensuring uninterrupted availability through procurement of sound equipment and diligent upkeep thereof.

45. Accordingly, we do not find merit in the contention that the rotor damage of an imported machine, resulting in reduced Plant Load Factor, can be brought within the ambit of force majeure. The doctrine of force majeure is confined to events beyond the reasonable control of the generating company, such as natural calamities, war, or governmental prohibitions, and cannot be extended to cover equipment breakdowns which fall within the realm of operational risk. Plant availability is a controllable parameter under the Regulations, and outages arising from machinery failure are ordinarily attributable to the generator’s maintenance and operational responsibilities. Only where the inability to repair or replace the rotor is demonstrably occasioned by external and uncontrollable causes—such as statutory embargo on imports or global disruptions preventing supply of critical spares—could the plea of force majeure be entertained. In the present case, in the absence of such circumstances, the shortfall in PLF is to be treated as a controllable event, and the generator cannot claim exemption under force majeure.

46. With regard to the relaxation granted to WYC Hydel, the situation of RGTPS and WYC is very different. It has been observed by the State Commission that the WYC Hydel machine have outlived their useful life and the efficiency has gone down considerably accordingly State Commission determined the PLF at 50% for WYC Hydel for FY 2015-16, moreover such a decision has not been assailed before us. As such, these observations did not amount to a general relaxation of fixed charge recovery norms. Impugned Order need no interference on the issue and we accordingly upheld the findings in the Impugned Order on the issue.

CONCLUSION

Our Views on both the issues are summarized as under: ISSUE I: DIRECTION TO REFUND FIXED COSTS FOR PLANTS LESS THAN 10 YEARS. Findings in the Impugned Order that annual fixed charges are to be calculated as per Regulation 30(a) for RGTPP Units 1 & 2 and DCRTPP, which have not completed ten years of commercial operation, are set aside. It is held that monthly and annual fixed charges for these plants shall be calculated in terms of Regulation 30(c)(i). The matter is accordingly remanded to the State Commission to work out the annual fixed charges for these plants in the above terms. ISSUE II: TRUING-UP OF FIXED COSTS WITHOUT CONSIDERING FORCE MAJEURE CONDITIONS.

Impugned Order need no interference on the issue and we accordingly uphold the findings in the Impugned Order on the issue. The captioned Appeal and pending IAs if any are disposed of in above terms PRONOUNCED IN THE OPEN COURT ON THIS 08th DAY OF JULY, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE Pr/dk/ak/ag