M/s Renew Solar Energy (TN) Pvt. Ltd. vs Madhya Pradesh Electricity Regulatory Commission & Anr on 3 July 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The Appellant, an independent power producer of clean energy in the State of Madhya Pradesh, is disallowed by the order dated 6th December, 2018 passed by 1st Respondent – Madhya Pradesh Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in Appellant’s petition No. 09 of 2018 whereby the Commission rejected the request of the Appellant to be billed for import of power during non-solar hours on net-off basis as per Article 7.01 of the PPA instead of as per temporary HT industrial category as envisaged under Regulation 10 of MPERC (Co-generation and generation of Electricity from Renewable sources of Energy) (Revision-I) Regulations 2010 (hereinafter referred to as “2010 Co- generation Regulations”).

2. It appears in response to Request for Proposal (RFP) dated 28th November, 2013 issued by the 2nd Respondent – Madhya Pradesh Power Management Company Ltd. inviting bids for procurement of power from solar energy sources under “Case-1 RE”

bidding procedure through tariff based competitive bidding process, the Appellant successfully bid and accordingly entered into a Power Purchase Agreement (PPA) dated 5th June, 2014 with the 2nd Respondent for supply of 50 MW of power at the rate of Rs.6.97 per kWh from its solar power plant located in Village Hulpur, Ladpura & District Sheopur, Madhya Pradesh. The Appellant successfully commissioned the power plant in three phases i.e. on 7th May, 2015, 6th June, 2015 and 27th November, 2015 and has been supplying power to 2nd Respondent since the date of commissioning.

3. The Appellant has been raising invoices for the power supply by it to the 2nd Respondent as per Article 7.01 of the PPA by arriving at the bill amount by subtracting the imported units to exported units. The 2nd Respondent does not appear to have raised any objection to such bills. It also did not raise any separate invoices to the Appellant for the energy imported by it for start up of the solar plants till the March, 2016.

4. According to the Appellant, the 2nd Respondent unilaterally changed the billing pattern which was communicated to the Distribution Licensees vide letter dated 29th January, 2016, the contents of which are extracted hereinbelow:-

"However, due to some technical reasons an exception was mentioned at point no. 6 of the circulated guidelines, allowing treatment and billing of power drawn as per prevailing practice and payment on the basis of net energy supplied (i.e., energy exported to grid less energy imported from the grid) as per provisions of the respective PPAs by those generating plants from renewable energy sources, whose tariffs were determined by competitive biddings (i.e., select solar power projects). Now after reconsidering the matter and for the purpose of removal of difficulties, it has been decided that the procedural guidelines circulated vide this office letter under reference will be applicable for all generating plants from renewable energy sources including the plants for which tariffs have been determined through competitive biddings. Accordingly, the exception at point no. 6 of the guidelines mentioned in the above referred letter be treated as withdrawn."

5. Subsequently, vide letter dated 30th May, 2016, the 2nd Respondent instructed the Central Discom namely Madhya Pradesh Khestra Vidyut Vitran Company Limited to ask the Appellant to revise its bill for the month of April, 2016 for supply of electricity based upon the gross generation energy injected into the grid. The 2nd Respondent also directed the Central Discom to ask the Appellant to

raise all such future bills in terms of the letter dated 29th January, 2016 issued by 2nd Respondent to the Discoms. Consequently, the Central Discom began to raise bills to the Appellant for the power imported from the grid for the solar plant. While justifying the change in the billing pattern, 2nd Respondent relied upon Regulation 10 of 2010 MPERC, Co-generation Regulations.

6. It is in these circumstances that the Appellant had approached the Commission with petition No. 09 of 2018 with the following prayers :- “(a) Direct MPPMCL to allow the petitioner to raise bills in terms of Section 7.01 of the PPA which provides for billing on the basis of net-off of the import-export of auxiliary consumption power; (b) Direct MPPMCL to stop separately charging the petitioner for the power being imported for auxiliary consumption;

(c) Set aside and quash the bills which have already been raised by MPPMCL on the petitioner with the direction to net-off and past imported power against the export power in the future bills.”

7. The petition has been disposed off by the Commission vide order dated 6th December, 2018 thereby rejecting the prayers of the Appellant, which order has been impugned in this appeal.

8. We have heard Mr. Parinay Deep Shah, Learned Counsel for the Appellant, Mr. C.K. Rai, Learned Counsel for 1st Respondent and Mr. Nitin Guar, Learned Counsel for Respondent No. 2. We have also perused the written submissions filed by the Learned Counsels.

9. The core issue which arises for our consideration in this appeal is:- “Whether the term “shut down period” appearing in clause 10 of 2010 MPERC Co-generation Regulations includes the night time period when the Appellant’s solar power plant does not generate power due to absence of sunlight”.

10. While referring to the Regulation 10 of MPERC Co-generation Regulations 2010 and previous judgement of this Tribunal dated 23rd April, 2015 in Appeal No. 297 of 2013 titled GMR Gujarat Solar Power Pvt. Ltd. Vs. GERC & Ors., the reasoning given by the Commission for rejecting the prayers of the Appellant is as under :- “14. The Commission also noted that the export of power from solar power plant being the infirm power cannot be

equated to the firm import temporary power drawn by the petitioner from time to time. The tariffs for export and import of power are different at the point of connection. The import of power is required by the plant at the time when the generation is not available for in house requirement of power and, therefore, power available at the point of connection is used by the plant as a temporary measure till the generation is available for in house requirement and export to the grid. Also, the tariff determined by the Commission from time to time for solar energy based power generation is the maximum tariff for the purpose of export of power to the licensee only by the developer/generator and is subject to the bidding. Also, the tariff for import of power by the developer/generator is governed through retail supply tariff order. As such, the question of considering the difference of tariff between import and export of power under “change of law” does not arise. Therefore, the commission is of the view that the petitioner may be billed as per the extant provisions of the MPERC (Cogeneration and Generation of Electricity from Renewable Sources of Energy) Regulations, 2010 as amended.”

11. We are unable to concur with such reasoning of the Commission.

12. Article 7.1 of the PPA relates to billing and power accounting and is extracted herein below”- “SECTION 7.01: BILLING AND POWER ACCOUNTING Every month, SLDC/RLDC shall intimate to the concerned Transco/Discom (in whose area the drawl point is situated), the net power (kWh) delivery point (Export Unit – Import Units = Net Power kWh) for the purpose of billing for sale by the Seller to the grid.”

13. Perusal of this provision in the PPA clearly reveals that the bills with regard to the sale of power by the power producer i.e. the Appellant shall be raised in respect of the net power (kWh) delivered at the delivery point i.e. export units - import units.

14. Regulation 10 of 2010 MPERC, Co-generation, Regulations provides as under :- “The Generator/Co-generation from Renewable Sources would be entitled to draw power exclusively for its own use from the Distribution Licensee’s network during shutdown period of its Plant or during other emergencies. The energy consumed would be billed at the rate applicable to Temporary Connection under HT Industrial Category.”

15. Manifestly, this Regulation provides methodology for billing the energy consumed by a power generator, which is involved in generation of power from renewable sources, during shut down period of the power plant or during other emergencies.

16. The Commission has proceeded on the assumption that the Appellant’s solar power plant has to be taken to have “shut-down” during night time when it is unable to generate power due to the absence of sunlight and, therefore, the power consumed by the power plant during the said period for its own use from the grid has to be billed separately at the rate applicable to Temporary HT Industrial Category.

17. It is a common feature that a solar power plant generates electricity only when the sunlight is available. They would be unable to generate electricity in case of unavailability of the sunlight even though the generating station remains operational throughout. During these hours when the solar power plant is unable to generate electricity due to lack of sunlight, the plant draws power from the system of the Distribution Licensees for its auxiliary consumption. However, the fact remains that the solar power plant does not remain “shut down” during the non-solar hours when it is unable to produce

electricity in the absence of sunlight. The power plant remains operational throughout and ready to generate power as and when solar radiation becomes available.

18. The term “shut down” used in Regulation 10 in reference to a power plant means when the whole power plant is turned off and is unable to generate power not because of unavailability of the resources (which is the sunlight in case of solar power plant) but because the machinery of the plant had been turned off and the plant is inactive. In other words, “shut down” indicates that the power plant has ceased to operate and is unable to generate power.

19. That is not the case with the solar power plants during non-solar hours when they are unable to produce electricity not because of machinery having been switched off and having ceased to operate but because of the absence of sunlight even though the plant has been operational throughout.

20. The arguments advanced on behalf of the Respondents that “shut down” encompasses periods when the plant is idle or non- functional from the stand point of generation though it may remain strictly ready, is devoid of any merit. When a power plant is strictly ready for power generation but is unable to generate power due to

lack of resources, it cannot be said that the plant is under shut down. Such an interpretation would be in consonance to the doctrine of purposive interpretation and would advance the object as well as purpose of setting up of solar power plants.

21. The expression “or during such emergencies” appearing after the term “shut down” in Regulation 10 is to be read as belonging to the same clause as the events of shut down, as envisaged under the principle of ejusdem generis. In other words, such situation would not encompass the period where the power plant is operational as well as ready for power generation but is unable to generate due to lack of resources i.e. sunlight in case of solar power plant.

22. Commission’s reliance on the judgement of this Tribunal dated 23rd April, 2015 in Appeal No. 297 of 2013 titled GMR Gujarat Solar Power Pvt. Ltd. Vs. GERC & Ors. is totally misplaced. The relevant extract of the said judgement of this Tribunal is given below :-

23. We have also been informed by the Appellant that the PPA entered into with the Distribution Licensees is as per the model PPA which was approved by the State Commission in the year 2009. This is not disputed by the Respondents. The PPA had a provision for charging energy supplied by the distribution companies to Solar PV

project at temporary HTP supply rate. Therefore, the State Commission was not correct to declare that Clause regarding 'Delivered Energy' as provided for in the PPA as illegal. The PPA was based on the solar power tariff order dated 29.01.2010 of the State Commission and the model PPA approved by the State Commission. Therefore, the State Commission was wrong in declaring the Clause relating to 'Delivered Energy' as illegal and void ab initio. …

25. The impugned order has been passed contrary to the generic tariff order dated 29.01.2010 for solar projects. The PPA entered into between the Appellant and GUVNL was based on model PPA and the tariff order dated 29.01.2010. The State Commission has illegally interfered with the PPA which was in order and was in consonance with the solar tariff order dated 29.01.2010. The Solar PV plant has to be charged at temporary HTP category tariff for import of standby power supply as determined by the State Commission in retail supply tariff order from time to time in consonance with the solar tariff order dated 29.01.2010 and the amount has to be adjusted in the bill for supply of solar power by Solar PV Power Plant to GUVNL.”

23. Therefore, in that case, the PPA executed between the power generated and the Discom clearly provided that the energy supply by Discom to solar power project shall be charged at temporary tariff. Accordingly, this Tribunal directed that the billing of import power must happen as per the relevant clause of the PPA. To the contrary, in the instant case, the Commission instead of directing the 2nd Respondent to bill the import of power by the Appellant’s power project as per the relevant clause of the PPA, has directed the 2nd Respondent to issue bills for the import of power by Appellant’s power project in terms of the Regulation 10 of MPERC Co- generation Regulations, 2010 which is clearly inapplicable to the facts of the case.

24. Much emphasis was laid by Learned Counsel for the Respondents on another judgement of this Tribunal dated 12th February, 2020 in Appeal No. 112 of 2017 titled M/s Malwa Solar Power Generation Pvt. Ltd. Vs. MPERC and ors., to submit that under Regulation 10 of MPERC Co-generation Regulations import of power by a solar plant is to be billed at temporary HT Industrial category. We have gone through the said judgement and find the facts involved therein are clearly distinguishable from the facts of the instant case.

The prominent distinguishing feature, which goes to the root of the matter is that in Malwa case, generator was not supplying power to any Discom within the State of Madhya Pradesh and the entire power generated by the power plant was sold to Discoms outside the State through SECI under back to back power sale agreements. It was in this factual matrix that this Tribunal held that netting off could not be permitted since the generator was not selling power to Madhya Pradesh Discoms.

25. Para 40 of the judgement is material on this aspect and is extracted hereinbelow:- “40. Apparently, the Appellant is not selling power to any of the Discoms within the State of MP. Entire power generated by the Appellant Solar Plants is sold to different Discoms outside MP through SECI as stated above i.e., back to back PSA by SECI with different distribution companies. Therefore, the question of netting off power imported by the Appellant, whatever name it is called auxiliary or otherwise cannot be netted off against the power it would generate and supply to various Discoms through SECI. If the power generated by the Appellant from its solar plant was sold to MP Discom, then whatever regulation would apply to such import and export of power would also apply to the Appellant.”

26. That is not the situation in the instant case. Here, the Appellant is supplying power to the Madhya Pradesh Discom itself under the PPA dated 05/06/2014.

27. Further, notably this Tribunal has not proceeded to interpret the term “shut down” appearing in Regulation 10 of 2010 MPERC Co- generation Regulations, and, therefore, has not held that a solar power plant is deemed to be “shut down” during night hours when it is unable to produce power due to lack of solar radiation.

28. We find that Article 7.01 of the PPA expressly provides for billing on the basis of netting off power i.e. export units - import units which mechanism has been agreed upon between the parties. In fact, the Appellant had been raising bills as per the mechanism provided under Article 7.01 of the PPA since date of commissioning of the power plant which were never objected to by the 2nd Respondent till the month of May, 2016 when there was a sudden change of mind on the part of the 2nd Respondent, which clearly is not in consonance with the provisions of the PPA and thus cannot be countenanced.

29. In view of the above discussion, we answer the issue framed by us in paragraph No. 9 herein above in negative. We make it clear

that a solar power plant cannot be taken to be in “shut down” mode during night hours when it is unable to produce power due to absence of solar radiation and therefore, import of power by the plant during that period from the system of distribution licensee is not regulated by Regulation 10 of 2010 MPERC Co-generation Regulations. Such power has to be billed on net-off basis as per Article 7.01 of the PPA.

30. Hence, the impugned order of the Commission cannot be sustained and is hereby set aside. We direct that the Appellant shall continue raising bills in terms of Article 7.01 of the PPA dated 5th June, 2014 executed between the parties on the basis of net-off power i.e. export units - import units and restrain the 2nd Respondent – MPPCL from charging the Appellant separately for the power imported by it for auxiliary consumption during non-solar hours.

31. The Appeal stand allowed accordingly in these terms. Pronounced in the open court on this 3rd day of July, 2026.

(Virender Bhat)

(Seema Gupta)

Judicial Member

Officiating Chairperson

✓ REPORTABLE / NON REPORTABLE js