Petition for Adoption of the Usage Charges for 1200 MW Solar PV Power Station (Tranche-III) Connected to the ISTS /STU under Central Power Sector undertaking Scheme Phase-II – EQ

Summary:

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### 1. Background and Context
– **Petitioner:** Solar Energy Corporation of India (SECI).
– **Prayer:** Adoption of usage charges of **₹2.57/kWh** with **VGF of ₹44,72,000 per MW** for a 1200 MW solar PV project, discovered through competitive bidding.
– **Governing Framework:**
– **CPSU Scheme Phase-II** (MNRE, March 5, 2019) for setting up 12,000 MW grid-connected solar PV projects by Government Producers with Viability Gap Funding (VGF).
– **Solar Guidelines** (Ministry of Power, August 3, 2017) for tariff-based competitive bidding.
– **Bidding Process:** Conducted by **IREDA** as Nodal Agency; e-Reverse Auction on **September 30, 2021**.
– **L1 Bidder:** SJVN Limited with VGF of **₹44,72,000 per MW** and tariff of **₹2.45/kWh**.

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### 2. Key Events and SECI’s Role
– SECI participated in the bidding but **was not successful** (quoted VGF of ₹55,00,000 per MW).
– Subsequently, SECI requested MNRE to allocate 1200 MW capacity at L1 terms.
– **MNRE, vide letter dated December 6, 2021**, allocated **1200 MW to SECI** under the CPSU Scheme.
– **IREDA issued Letter of Award (LoA) on December 7, 2021** to SECI with:
– VGF: ₹44,72,000 per MW
– Usage charges: ₹2.45/kWh (initially)
– SECI entered into **Power Usage Agreements (PUAs)** with:
– **MPPMCL** (Madhya Pradesh) – 500 MW at ₹2.57/kWh
– **GUVNL** (Gujarat) – 700 MW at ₹2.57/kWh

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### 3. Change in Law and GST Impact
– **Ministry of Finance Notification No. 8/2021 (September 30, 2021)** increased GST on renewable energy devices from **5% to 12%** w.e.f. October 1, 2021.
– MNRE, vide letters dated **September 16, 2022, and December 27, 2022**, recognized this as a **Change in Law** and raised the **ceiling usage charges from ₹2.45/kWh to ₹2.57/kWh** (a 4.9% increase).

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### 4. Key Issues and Commission’s Analysis
#### A. Validity of Allotment of 1200 MW to SECI
– The CPSU Scheme allows **allotment of up to 50 MW** to a willing Government entity at L1 rate without bidding, within 4 months of bidding.
– MNRE, under its **power to remove difficulties**, allocated **1200 MW** to SECI (exceeding the 50 MW limit) subject to matching L1 terms.
– **CERC noted** that SECI failed to cite the specific provision under which the allocation was made and directed it to avoid such procedural lapses in the future.

#### B. Tariff Adoption
– CERC held that **parameters prevailing on the date of bidding must be the reference point**.
– Post-bidding changes can only be considered if they qualify as **Change in Law** under the PUA.
– Accordingly, the Commission **adopted the usage charges of ₹2.45/kWh** (not ₹2.57/kWh) for the 1200 MW project.

#### C. Change in Law Compensation
– SECI was granted **liberty to file a separate petition within six weeks** to seek relief under the Change in Law provisions of the PUAs.
– In the interim, CERC allowed SECI to **charge ₹2.57/kWh on a provisional basis**, pending final decision.

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