Petition with CERC (Procedure, Terms and Conditions for Grant of Transmission License and other related matters) Regulations to KPS III HVDC Transmission Ltd – EQ
Summary:
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### 1. Key Regulatory Context
| Parameter | Petition No. 27/TL/2026 | Petition No. 28/AT/2026 |
| :— | :— | :— |
| **Forum** | Central Electricity Regulatory Commission (CERC) | Central Electricity Regulatory Commission (CERC) |
| **Petitioners** | Adani Energy Solutions Limited (AESL) and Anr. | Adani Energy Solutions Limited (AESL) and Anr. |
| **Key Entity** | KPS III HVDC Transmission Limited (100% subsidiary of AESL) | KPS III HVDC Transmission Limited (100% subsidiary of AESL) |
| **Relief Sought** | Grant of transmission license under Sections 14, 15, 79(1)(e) of the Electricity Act, 2003 | Adoption of transmission charges under Section 63 of the Electricity Act, 2003 |
| **Applicable Regulations** | CERC (Procedure, Terms and Conditions for Grant of Transmission License and other related matters) Regulations, 2024 | Competitive bidding framework for transmission projects |
| **Respondents** | Central Transmission Utility of India Limited (CTUIL) & Others | Central Transmission Utility of India Limited (CTUIL) & Another |
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### 2. Nature of the Project & Business Significance
| Project Element | Description | Business Relevance |
| :— | :— | :— |
| **KPS III HVDC Transmission Limited** | A special purpose vehicle (SPV) incorporated as a 100% wholly owned subsidiary of Adani Energy Solutions Limited (AESL). | This SPV structure is typical for project financing in the transmission sector, isolating project risks and facilitating equity infusion. |
| **HVDC Transmission System** | High Voltage Direct Current (HVDC) transmission system. | HVDC technology is used for long-distance, high-capacity power transmission with lower losses. This indicates a project of significant scale and strategic importance, likely connecting a major generation cluster to the national grid. |
| **Transmission License** | Required for ownership, operation, and maintenance of inter-state transmission assets. | Grant of license enables the SPV to operate as a legally recognized transmission service provider, with rights to collect transmission charges. |
| **Adoption of Transmission Charges under Section 63** | Section 63 allows CERC to adopt tariffs determined through a transparent competitive bidding process. | This route provides tariff certainty and is typically faster than cost-plus tariff determination. The adoption of charges is critical for revenue certainty and project financing. |
**Key Business Implications:**
– **Strategic Expansion:** This represents a significant expansion of Adani Energy Solutions’ transmission portfolio, reinforcing its position as a major private sector transmission infrastructure player in India.
– **Revenue Certainty:** Successful grant of license and adoption of transmission charges will provide long-term, regulated revenue streams for the SPV, backed by CERC’s regulatory framework.
– **Project Financing:** The twin approvals (license + tariff adoption) are prerequisites for achieving financial closure. Lenders will require both to be in place before disbursing project loans.
– **Grid Integration:** The HVDC project is likely tied to evacuation of power from a large generation source (possibly renewable energy zones or thermal plants), contributing to national grid stability and renewable energy integration goals.
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### 3. Procedural Status & Key Developments
| Date of Hearing | 18th March 2026 |
| :— | :— |
| **Coram** | Chairperson and three Members of CERC |
| **Petitioner’s Representative** | Appeared and submitted that the amended memo of parties was filed on 02.03.2026, and all requirements including publication of notices under the Transmission License Regulations have been complied with. Replies to public comments/objections were also filed. |
| **Commission’s Observation** | Procedural requirements for informing parties (respondents) under the 2024 Transmission License Regulations were not fully completed. |
| **Commission’s Directions** | |
| – **To Co-Petitioner (KPS III HVDC Transmission Ltd.)** | Serve notice upon the respondents within **two weeks** following the procedure prescribed in the 2024 Transmission License Regulations. |
| – **To Respondents** | May file their respective responses within **one week** after receipt of notice. |
| – **To Petitioners** | May file rejoinder thereafter as per procedure. |
| **Final Disposition** | Subject to compliance with the above, the Commission **reserved the order** in both matters. |
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### 4. Key Business & Strategic Points
1. **Procedural Compliance is Critical:** While the petitioner had completed public notice and responded to objections, the Commission specifically noted that service of notice on individual respondents under the 2024 Transmission License Regulations was not yet fully executed. This highlights the importance of strict adherence to procedural formalities in regulatory approvals.
2. **Two-Step Approval Process:** The two petitions are interlinked:
– **License Petition (27/TL/2026):** Establishes the legal right to own and operate the transmission asset.
– **Tariff Adoption Petition (28/AT/2026):** Establishes the revenue framework for the asset.
Both must be approved for the project to achieve commercial and regulatory closure.
3. **Section 63 Tariff Adoption Advantage:** Seeking tariff adoption under Section 63 (based on competitive bidding outcomes) rather than cost-plus regulation under Section 62 provides:
– **Predictability:** Tariff is known upfront.
– **Reduced Regulatory Scrutiny:** Limited to ensuring bidding process integrity rather than detailed cost scrutiny.
– **Faster Approval:** Typically shorter timelines compared to cost-plus determination.
4. **SPV Structure:** KPS III HVDC Transmission Limited being a 100% subsidiary of AESL allows:
– **Risk Isolation:** Project-specific liabilities are ring-fenced.
– **Financing Flexibility:** Easier to raise project finance with assets as collateral.
– **Regulatory Clarity:** SPV can be licensed independently.
5. **Reserved for Order:** The Commission’s direction to complete procedural formalities before reserving the matter indicates that the substantive merits of both petitions are likely acceptable. Once procedural compliance is confirmed, orders are expected to be issued.
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