TAMIL NADU ELECTRICITY REGULATORY COMMISSION

Order of the Commission dated this the 28th Day of March 2023

PRESENT:

Thiru M.Chandrasekar .... Chairman

Thiru K.Venkatesan …. Member

and
Thiru B.Mohan …. Member (Legal)

I.A. No. 1 of 2014

in
D.R.P. No.69 of 2014
and
D.R.P. No.69 of 2014

M/s.Sundaram Textiles Limited

Therkkutheru
Melur Road
Madurai – 625 122.
… Petitioner
Thiru.Rahul Balaji
Advocate for the Petitioner

Vs

1. Tamil Nadu Generation and Distribution Corporation Limited

(TANGEDCO)
Represented by its Chairman and Managing Director
144, Anna Salai
Chennai – 600 002.

2. The Chief Financial Controller (Revenue)

TANGEDCO
No. 144, Anna Salai
Chennai – 600 002.

3. The Superintending Engineer

CEDC/North, TANGEDCO
144, Anna Salai
Chennai – 600 002.

4. The Superintending Engineer

Tamil Nadu Electricity Board
Madurai Electricity Distribution Circle
Madurai – 625 007.

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5. The Accounts Officer / Revenue
CEDC/ North, TANGEDCO
Chennai – 600 002.

….Respondents
Thiru.N.Kumanan and
Thiru.A.P.Venkatachalapathy,
Standing Counsel for TANGEDCO

This Dispute Resolution Petition stands preferred by the Petitioner

M/s.Sundaram Textiles Limited, Madurai, with a prayer to direct the TANGEDCO to

first effect adjustment of the wind energy generated from the petitioner‟s captive

windmills operating under the REC scheme against the petitioner‟s service in terms

of the grounds stated.

This petition having come up for hearing on 07.02.2023 in the presence of

Thiru Rahul Balaji, Advocate for the Petitioner and Tvl. N.Kumanan and

A.P.Venkatachalapathy, Standing Counsel for the Respondents and on

consideration of the submission made by the Counsel for the Petitioner and

Respondent, this Commission passes the following:

ORDER

1. Facts of the Case:-

This Commission issued the Comprehensive Tariff order on Wind Energy in

T.O. No.6 of 2012 dated 31.07.2012. Consequent to this Tariff order, TANGEDCO

issued a clarificatory working instructions vide Circular No.CFC/Rev/FC/AAO/HT/

D.606/12, dated 14.09.2012 with regard to adjustment of Wind energy generated

by the windmills covered under REC scheme. Aggrieved over this impugned letter

dated 14.09.2012, this petition has been filed to stay this communication and all

proceedings pursuant thereto including the Excess demand/energy charges

calculated on the basis of this letter. And also, sought to direct the TANGEDCO to

first effect adjustment of the wind energy generated from the petitioner‟s captive
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windmills operating under the Renewable Energy Certificate (REC) scheme against

the petitioner‟s service and thereafter adjust the energy generated by the other

Windmills in terms of the grounds stated.

2. Prayer in the Interim Application of the Petitioner:-

The prayer of the petitioner in I.A. No.1 of 2014 in D.R.P. No. 69 of 2014 is

to grant an interim stay of the communication of the 2nd Respondent, Chief

Financial Controller, TANGEDCO bearing Ref. No.CFC/FC/REV/AAO/HT/D.606/

2012 dated 14.09.2012 and all proceedings pursuant thereto for alleged excess

demand and excess energy calculated on the basis of such Circular as evident in

the current consumptions bills issued by the 5th Respondent for the year 2012-13

on the HT SC No. 203

3. Contentions of the Petitioner:-

3.1. The petitioner is a public limited company carrying on the business of

manufacturing cotton yarn and has invested in captive generation windmills with a

total installed capacity of 0.750 MW towards meeting its power requirement and in

addition, also consumers group captive power under arrangement with M/s. Beta

Wind Farm Private Limited from its Tuticorin, Tirunelveli and Udumalpet wind farms

under REC and non-REC scheme. It has consumed a total of 8,06,991 REC units

from M/s. Beta Wind Farm Private Limited from its Tuticorin and Tirunelveli EDC.

3.2. The petitioner sets out below details of the Non-REC WEG (s) supplying

power to it:-

Wind mills Details (M/s.Sundaram Textiles Limited )

Weg HTSC Capacity Tariff Feeder Name Date of Village Name
No. No. in KW Commissioning
29089 2246 750 11 KV Kulyaneri 27-03-2007 Ayansurandai
Village,
TenkasiTaluk,
Tirunelveli
District
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3.3. The National Action Plan for Climate Change (NAPCC) announced by the

Hon. Prime Minister of India on June 30, 2008 envisages several measures to

address global warming. One of the important measures identified involves

increasing the share of renewable energy in total electricity consumption in the

country. NAPCC has set the target of 5% renewable energy purchase for FY 2009-

10 against current level of around 3.5%. Further, NAPCC envisages that such

target will increase by 1% for next 10 years. This would mean NAPCC envisages

renewable energy to constitute approximately 15% of the energy mix of India. This

would require quantum jump in deployment of renewable energy across the

country.

3.4. Under the Electricity Act 2003, the State Electricity Regulatory Commissions

(SERC) set targets for distribution companies to purchase certain percentage of

their total power requirement from renewable energy sources. This target is termed

as Renewable Purchase Obligation (RPO). However, there are certain limitations of

State specific approach when RE development strategies are to be deployed at

national level.

3.5. The existing legal framework under Electricity Act 2003 puts responsibility

for promotion of renewable energy on SERCs. As a result, the regulations

developed by the SERCs differ from each other on many counts. Further, these

regulations do not recognize purchase of renewable energy from outside the State

for the purpose of fulfilment of RPO target set by the SERC for the distribution utility

in the State. The requirement of scheduling and prohibitive long term open access

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charges poses major barrier for Renewable Energy ("RE") abundant States to

undertake inter-State sale of their surplus RE based power to the States which do

not have sufficient RE based power. Consequently, the States with lower RE

potential have to keep their RPO target at lower level.

3.6. The Central Electricity Regulatory Commission (hereinafter referred to as

"CERC") has notified 'Terms and Conditions for Recognition and Issuance of

Renewable Energy Certificate for Renewable Energy Generation Regulations,

2010, vide Notification No.L-1/12/2010-CERC, dated 14thJanuary 2010. Since

renewable energy sources are not evenly spread across the country and the very

high cost of generation from Renewable Energy sources discourages the

distribution companies from purchasing electricity generated from Renewable

Energy sources, the Renewable Energy Certificate mechanism evolved and notified

by CERC seeks to address this and many such issues connected with the

Renewable Energy generation. One of the primary objectives of this mechanism is

to address the mismatch between availability of Renewable Energy sources and

the requirement of the obligated entities to meet their renewable purchase

obligation by purchasing green attributes of renewable energy remotely located in

the form of Renewable Energy Certificate (hereinafter referred to as "REC").

3.7. Further, to address the mismatch between availability of Renewable Energy

sources and the requirement of the obligated entities to meet their renewable

purchase obligation (RPO), the Hon'ble CERC, vide order no. L-/12/2010-CERC

dated 9.11.2010 notified the detailed procedure for registration of eligible entities,

verification of generation of electricity and its injection into the grid by the eligible

entity and issuance of certificates, etc. under REC Scheme wherein cost of
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electricity generation from renewable energy sources is divided into two parts as

cost of electricity generation equivalent to conventional energy sources and the

cost for environmental attributes, containing inter alia the following distinct features

to be complied by the Renewable Energy Generating Company:-

A. Not have any Power Purchase Agreement for the capacity related to such

generation to sell electricity at a preferential tariff determined by the

Commission;

B. Sell the conventional energy component to DISCOM at a price not

exceeding the pooled cost of power purchase in the previous year as

determined by the SERC;

C. Selling Environment attribute (REC part) of renewable energy in the form of

Renewable Energy Certificate (hereinafter referred to as "REC") tradable in

Power Exchange between the floor price and forbearance price.

3.8. The clause 5 of (amended) CERC Terms and Conditions for recognition and

issuance of Renewable Energy Certificate for Renewable Energy Generation

Regulations, 2010, describes the eligibility criteria for issuance of REC as under:

" (1) A generating company engaged in generation of electricity from

renewable energy sources shall be eligible to apply for registration for
issuance of and dealing in Certificates if it fulfils the following conditions:

(a) it has obtained accreditation from the State Agency;

(b) it does not have any power purchase agreement for the capacity
related to such generation to sell electricity at a preferential tariff
determined by the Appropriate Commission; and
(c) it sells the electricity generated either (i) to the distribution licensee of
the area in which the eligible entity is located, at a price not exceeding
the pooled cost of power purchase of such distribution licensee, or (ii)
to any other licensee or to an open access consumer at a mutually
agreed price, or through power exchange at market determined price.

Explanation.- for the purpose of these regulations 'Pooled Cost of Purchase'

means the weighted average pooled price at which the distribution licensee
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 has purchased the electricity including cost of self-generation, if any, in the
previous year from all the energy suppliers long-term and short-term, but
excluding those based on renewable energy sources, as the case may be.

Provided that such a generating company having entered into a power

purchase agreement for sale of electricity at a preferential tariff shall not, in
case of pre -mature termination of the agreement, be eligible for participating
in the Renewable Energy Certificate (REC) scheme for a period of three
years from the date of termination of such agreement or till the scheduled
date of expiry of power purchase agreement whichever is earlier, if any order
or ruling is found to have been passed by an Appropriate Commission or a
competent court against the generating company for material breach of the
terms and conditions of the said power purchase agreement.

Provided further that a Captive Power Producer (CPP) based on renewable

energy sources shall be eligible for the entire energy generated from such
plant including self- consumption for participating in the REC scheme subject
to the condition that such CPP has not availed or does not propose to avail
any benefit in the form of concessional/promotional transmission or wheeling
charges, banking facility benefit and waiver of electricity duty.

Provided also that if such a CPP forgoes on its own, the benefits of
concessional transmission or wheeling charges, banking facility benefit and
waiver of electricity duty, it shall become eligible for participating in the REC
scheme only after a period of three years has elapsed from the date of
forgoing such benefits.

Provided also that the abovementioned condition for CPPs for participating
in the REC scheme shall not apply if the benefits given to such CPPs in the
form of concessional transmission or wheeling charges, banking facility
benefit and waiver of electricity duty are withdrawn by the State Electricity
Regulatory Commission and/or the State Government. The dispute, if any,
on the question as to whether such concessional/promotional benefits were
availed by a CPP or not shall be referred to the Appropriate Commission.

Explanation: - For the purpose of this Regulation, the expression 'banking

facility benefit' shall mean only such banking facility whereby the CPP gets
the benefit of utilizing the banked energy at any time (including peak hours)
even when it has injected into grid during off-peak hours.”

3.9. The Commission has, vide Notification No. TNERC/RPO/19/1 dated

17.12.2010 has notified the 'Renewable Energy Purchase Obligation Regulations,

2010, in line with the CERC regulations and 'draft model regulations for SERCs'

recommended by the Forum of Regulators. The TNERC Regulations make it

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mandatory for all obligated entities to 'purchase not less than defined minimum

percentage of its consumption of energy from renewable energy sources under the

Renewable Purchase Obligation (RPO) during a year as specified in the

Commission's tariff regulations/orders on renewable energy issued from time to

time …..” These Regulations also provide that 'the Certificates issued under the

Central Electricity Regulatory Commission (Terms and Conditions for recognition

and issuance of Renewable Energy Certificate for Renewable Energy Generation)

Regulations, 2010 shall be the valid instruments for the discharge of the mandatory

obligations set out in these regulations for the obligated entities to purchase

electricity from renewable energy sources .... '.

3.10. Clause 6 of the TNERC Regulations provides as under:

“6. Eligibility and Registration for Certificates.–

(1) A generating company engaged in generation of electricity from

renewable energy sources shall be eligible for obtaining accreditation
from the State Agency if it fulfils the following conditions:
(a) It does not have any power purchase agreement for the capacity
related to such generation to sell electricity at a preferential tariff
determined by the Commission; and
(b) It sells the electricity generated either (i) to the distribution licensee in
the State of Tamil Nadu at a price not exceeding the pooled cost of
power purchase, or (ii) to any other licensee or to an open access
consumer at a mutually agreed price, or through power exchange at
market determined price.”
From the above, it is clear that an entity to be eligible under REC mechanism, inter-

alia, has to sell electricity component to the Utility at the 'pooled cost of power

purchase' of that Utility, as defined in the Regulations.

3.11. Further, the Commission vide Order No.TNERC/M.O.4/E/RPO dated

28-12-2010 has issued the “Order on Pooled Cost of Power Purchase by

TANGEDCO for the year 2009-10 and fee and charges payable under regulation of
8
TNERC (Renewable Energy Purchase Obligation) Regulations, 2010' and has fixed

the 'pooled cost of power purchase' by TANGEDCO for the year 2009-10 as

Rs.2.37 / kWh. Thereafter, the pooled cost of power is being notified for the

subsequent periods.

3.12. In addition, for avoidance of doubt, the TNERC has reiterated the definition

of 'Pooled Cost of Power Purchase' (para 2 of the Order) as under:

"Pooled cost of power purchase " means the weighted average pooled price
at which the distribution licensee has purchased the electricity cost of self-
generation in the previous year from all the long term energy suppliers but
excluding those based on liquid fuel, purchase from traders, short term
purchases and renewable energy sources.”

3.13. The relevant clauses, for the purpose of present petition in respect of the

said agreements relating to REC WEGs, are extracted herein below:

“6. Billing

(1) Surplus energy available after captive use are lapsed;

(2) The distribution licensee shall raise bills on the REG or the captive

consumer, as the case may be, for the charges payable towards

startup power and power drawn for other purpose, wheeling charges,

excess demands and excess energy charges, cross subsidy

surcharge wherever applicable etc, as per the order regulations of the

commission for the time being in force.

(3) The STU shall raise bills on the REG holder for the charges payable

towards transmission charges, scheduling and system operation

charges, etc. As per the order / regulations of the commission for the

time being in force.

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 (4) Wherever the renewable energy generation in a billing month is in

excess of the consumption in that month, the balance energy shall be

sold to the Distribution Licensee at a price not exceeding the pooled

cost of power purchase as defined in Tamil Nadu Electricity

Regulatory Commission (Renewable Energy Purchase Obligation)

Regulations, 2010 and amendments issued from time to time.

3.14. In this regard, it would be relevant to state that under the provisions of the

Electricity Act, the rights available to a generator under section 9 specifically

provides that a person is entitled to construct, maintain or operate the captive

generating plant and he shall have the right to open access for carrying such

electricity from a captive developing plant to the destination of his use.

3.15. For over one and a half years, the adjustment of the Wind energy has been

done by adjusting the units generated by the REC Windmills first and thereafter the

preferential tariff based Windmills. Wherever there is any excess, the same is

banked (limited to the generation of the preferential tariff windmills). The adjustment

of the units generated from the annual installed WTG under the REC Scheme is

also in consonance with Tariff Order No.6 of 2012 relating to Wind Energy, wherein

the Commission in the context of priority of adjustment of wind energy has

specifically provided under para-5 E Rule 6 that if a consumer wheels energy for

adjustment from more than one Windmill, with such Wind Mill having been

commissioned on different dates, priority for first adjustment shall be given to the

Windmill Commissioned on a latter day. The energy generated from the wind mill

commissioned on an earlier date can be adjusted last. The petitioner had therefore,

even on this basis, expected that the adjustment in billing to be strictly in

10
accordance with the applicable such priority for adjustment. It appears that

consequent upon the Comprehensive Wind Tariff Order No.6 dated 31.7.2012 that

the order coming into effect on 1.8.2012 necessary working instructions had also

been issued. By virtue of the tariff order, the said adjustment priority attained

finality.

3.16. The petitioner was therefore surprised to receive an audit demand notice

dated 19-06-2014 for the year 2012-13 in respect of its HTSC No.203 wherein the

adjustment was made in a manner contrary to the specific provisions of the contract

between the parties and the applicable tariff order.

3.17. Upon enquiry of such change in manner of billing it appears that the Chief

Financial Controller upon a request for a clarification vide his letter dated 14.9.2012

Chief Financial Controller, TANGEDCO bearing Ref. No.CFC/FC/REV/ AAO/ HT/

D.606/2012 had issued instructions in respect of the manner of adjustment as

follows:-

(a) The TNERG order on wind energy & order on REC does not have any

provision in regard to adjustment priority of banked energy and REC power.

(b) The TANGEDGO in principle adopting the procedure of adjusting the high

cost power first and lesser cost power later i. e the first priority given for

power generator from the later date agreement and vice versa.

(c) In clause 8.2.15 of TNERC Order No.6 dated 31.07.2012 on Wind Energy

issued by the Commission specified that Wind Energy Generators availing

REC one month adjustment period is allowed as permitted for conventional

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 power. The unutilized REC energy will get lapsed as in the case of

conventional power.

d) As long as the banking facilities are not extended to the WEG availing REC,

this power will become cheaper than the power generated from the WEG

availing banking facilities.

e) The Wind Energy Generator who avail banking facilities can utilize their

banked energy during the period of power scarcity and TANGEDGO is liable

to supply power to them by procuring in the open market at higher cost and

hence this power is costlier than power generated from Wind Energy

generator availing REC.

f) In line with the above, the higher cost power has to be adjusted first (i.e)

Wind Energy generated from wind mills with banking facilities and lesser

cost power shall be adjusted later i.e Wind Energy generated from wind mills

under REC.

Hence, it is clarified that the wind energy generated by wind mills with banking

facility shall be adjusted first and the wind energy generated from wind mills under

REC shall be adjusted later.

3.18. An entirely incorrect clarification has been issued wherein wind energy

generated by wind mill by banking facility was directed to be adjusted first and wind

energy generated from REC scheme be adjusted later. The said manner of

adjustment is contrary to the principle enshrined in the wind tariff order which

always mandates adjustment from the last unit first. It is only logical that REC wind

mills are permitted adjustment first since they operate on month to month lapsing of

energy and if any generator already has wind mills under the preferential regime

installed earlier, adjustment of units from Wind mills under the preferential regime
12
prior to the adjustment of units generated by Wind Mills under the REC scheme

would result in a situation contrary to the express purpose and intention of the REC

Scheme i.e. encourage investment in market determined NCES and generators

would, therefore, continue to invest only in preferential tariff based wind energy

generators. Such an interpretation assigned by TANGEDCO would be contrary to

its own interest as it would continue to get persons interested only in preferential

tariff rate WEG - if such an interpretation is given leading to the failure of the very

model of investment under the REC scheme.

3.19. The clarification is wholly arbitrary as TANGEDCO themselves admit that

there is no priority stipulation from the Commission regarding which energy to be

adjusted first. Therefore they ought to have approached the Commission before

arriving at any adjustment if they had any doubts rather than taking a decision by

themselves and the same is wholly impermissible.

3.20. The REC power is liable to lapse if not adjusted. Additionally, REC power

attracts 60% more charges as transmission charges, scheduling and system

operating charges, wheeling charges etc. The issue of banking of REC power is

subject matter of proceedings on remand by the Hon'ble APTEL in the case of MIS

Beta Wind Farm.

3.21. Since the generation of REC power attracts levying of higher charges (on

generation itself) and the fact that it is liable to lapse if not adjusted, this should

have the first priority of adjustment and not otherwise. The act of TANGEDCO in

adjusting the REC generation last amounts to unjust enrichment as any quantum

13
not adjusted will lapse and will be of no use to the consumer or the generator and

TANGEDCO will gain by such lapsing. The right of banking what rightfully belongs

to the consumer is being deprived of by such action from TANGEDCO which

amounts to depriving of someone's legitimate right and is therefore entirely illegal.

3.22. The above mentioned circular of the 3rd respondent bearing Ref.No.CFC/

FC/REV/ AAO/HT/D.606/2012 was challenged before the Hon'ble High Court of

Madras in WP 33439 of 2013, and the Hon'ble High Court vide its order dated

9.12.2013 was pleased to grant an interim stay of the said circular. The relevant

extract from the Hon'ble High Court's order is set out below:

"As the submission of the learned counsel for the petitioner appears to be

reasonable, till appropriate instructions are received, there shall be an order

of interim stay of the operation of the proceedings in No.CFC/FC/REV/AAO/

HT/D.606/2012 dated 14.09.2012, of the Chief Financial Controller

(Revenue), TANGEOCO …..."

3.23. The apparent position of the TANGEDCO that wind energy with banking

facility is costlier to TANGEDCO thus necessitating such adjustment is wholly

unreasonable considering the fact that the Banking charges are being recovered.

This is to be seen in the context of the current Tariff order (TR No.6 of 2012) which

clearly states that fixing of RS.0.94 per kWhr has been arrived at by calculating the

difference between the Average Power Purchase Cost and maximum Preferential

Tariff for wind energy that is being allowed. In other words, in the event of drawl of

14
banked energy, the cost is being recovered from the consumer itself and

TANGEDCO is insulated from additional impact if any. Thus TANGEDCO's position

of bankable energy being costly to them is without basis.

3.24. The respondent TANGEDCO is, by its arbitrary and illegal actions, enjoying

a double benefit, that of denying adjustment to the petitioner thereby forcibly

allowing the units to get lapsed and not paying for such lapsed units ( the units

which have already stood generated and utilised by TANGEDCO) thereby resulting

in unjust enrichment.

3.25. The adjustment that is sought to be changed and revised has been filed

herewith as an enclosure. It would be evident that the manner of adjustment would

leave the petitioner with the REC Windmills' generation being entirely not being

used for the benefit of the petitioner and the entire generation wasted. The

TANGEDCO would end in making enormous profit by such arbitrary action.

3.26. The impugned action by issuance of a „clarification‟ is violative of the

agreements entered into since the energy wheeling agreement itself specifically

provided for sale of the surplus units, the same ought to be done on month to

month basis in respect of the said REC WEG since lapsing of banked units in

respect of WTG covered under the REC scheme take place on a month to month

basis rather than on annual basis as in the case of preferential tariff based WTGs.

The said manner of adjustment is contrary to the principle enshrined in the wind

tariff order which always mandates adjustment from the last unit first. It is only

logical that REC wind mills are permitted adjustment first since they operate on

month to month lapsing of energy and if any generator already has wind mills under
15
the preferential regime installed earlier, adjustment of units from Wind mills under

the preferential regime prior to the adjustment of units generated by Wind Mills

under the REC scheme would result in a situation contrary to the express purpose

and intention of the REC Scheme i.e encourage investment in market determined

NCES and generators would, therefore, continue to invest only in preferential tariff

based wind energy generators.

3.27. The Petitioner therefore prays that the Commission may allow the Petition as

prayed for and render justice. The Petitioner has made out a prima facie case and

the balance of convenience is also in its favour in the grant of Orders as prayed for.

No prejudice, loss or hardship would be caused to the Respondents if the Petition

is allowed. On the contrary, grave prejudice, irreparable loss and hardship would be

caused to the members of the Petitioner if the present Petition is not allowed. The

Petitioner reserves its right to file additional pleadings and documents.

4. Contentions of the Respondents:-

4.1. TNEB‟s practice until the issuance of the Commission‟s Order No.3 dated

15-05-2006 in respect of wind mill has been that the wind mill generators may

either sell the surplus energy available after adjustment to TNEB at an outright

price of Rs 2.70 per unit or bank the surplus energy by deducting Banking charges

@ 5% of the energy banked. The banking period starts from 1st April of every year

to 31st March of the succeeding year. The unutilized banked energy as on 31 st

March of every year will be considered as lapsed.

4.2. The Commission had issued Order.No.3 dated.15.05.2006, with regard to

Power purchase and allied issues in respect of Non-Conventional Energy Sources

16
based Generating Plants and Non-Conventional Energy Sources based Co-

Generation Plants, after taking into account the existing practices adopted by Tamil

Nadu Electricity Board (TNEB) and the guidelines from the Ministry for Non-

Conventional Energy Sources (MNES), in respect of NCES.

4.3. In the said order the Commission had issued banking provision,

classification of the WEG and tariff for wind energy as follows:-

Classification of WEG:

1. Group I Projects:
Wind power projects Commissioned, and to be commissioned based on
agreements executed prior to the date of this order (i.e) 15.05.2006.
2. Group II Projects:
Wind power projects to be commissioned based on future agreements after
the date of this order (i.e).15.05.2006.
Tariff computation:

No. Particulars Tariff Rate per

kWHr.
1 WEG: Group I Rs.2.75
2 WEG: Group II Rs.2.90
Banking:

As followed by most of the other States/ the Commission retains the existing

practice of one year (from April to March) banking period of TNEB, for the NCES

based wind electric generators. However, for the Biomass and Bagasse based co-

gen generators, banking provisions shall not apply. The Commission fixes the

banking charges as 5% for WEG. The Licensee shall pay at a rate of 75% of

normal purchase rate for the unutilized portion of energy banked by the NCES

based wind electric generators.

Slot wise banking is permitted to enable unit to unit adjustments for the

respective slots towards rebate/ extra charges. However, 'the unutilized portion at
17
the expiry of banking period will not be distinctly dealt with for adjustment. Such

unutilized portion is eligible only for the 75% rate”.

4.4. Pursuant to the above, the Member/Generation had issued detailed working

instructions in order to implement the Commission's Order.No.3 dated.15.05.2006

vide circular dated 11.12.2007 wherein it has been stated as follows:-

“II) 5. If the Wind Energy wheeled for one (or) more than one HT service at

wheeling end from more than one Wind Electric Generator and Wind Electric

Generators were commissioned before 15.05.2006 and after 15.05.2006, the

higher tariff units have to be adjusted first. For the payment of unutilized

banked energy; the lower tariff rate has to be paid to the Generator at

Generating end. ……”

While wheeling the power from more than one Wind Electric Generator

towards the adjustment in one HT service, the adjustment has to be done in the

descending order of the wind tariff (i.e)., the higher tariff units have to be adjusted

first. It is to be noted that the same procedure was followed even for the

subsequent Order No.1, dt.20.03.2009 and there was no dispute by the generators.

4.5. The State Commission has issued Comprehensive Tariff Order.No.1 of

2009, dated.20.03.2009 on Wind Energy on classification of the WEG and tariff for

wind energy as follows:-

Classification of WEG:

1. Group I Projects:
Wind power projects commissioned, and to be commissioned based on
agreements executed prior to the date of this order (i.e). 15.05.2006.
18
 2. Group II Projects:
The windmills commissioned between 15.05.2006 and 19.03.2009
3. Group Ill:
The Windmills commissioned on or after 20.03.2009.
Tariff Computation:
1. The wind mills commissioned prior to 15-5-2006 shall be eligible for a
tariff of Rs.2.75 per unit.
2. The wind mills commissioned between 15-5-2006 and 18-9-2008
shall be eligible for a tariff of Rs.2.90 per unit.
3. The wind mills commissioned between 19-9-2008 and 19-3-2009
shall be eligible for a tariff of Rs.2.90 per unit. These windmills shall
be eligible for Rs.3.24 per unit from 20-3-2009 to 31-3-2009 and
Rs.3.39 per unit from 01.04.2009.
4. The windmills commissioned on or after 20-3-2009 shall be eligible for
tariff of Rs.3.24 per unit up to 31-3-2009 and the tariff of Rs.3.39 per
unit from 01-04-2009”.

4.6. In this connection to implement the above order, the Director/ Generation/

TANGEDCO had issued instruction vide Circular Memo. No. CE/NCES/ EE/WPP/

AEE-2 /F.TNERC Order No.1/D. /11, dated. 01.07.2011 as follows:-

“As per the Hon'ble ATE Judgment dated.18.03.2011 and approval of

CMD/TANGEDCO dated 29-06-2011…………, it is hereby instructed to
implement the TNERC Comprehensive Tariff Order on wind energy Order
No.1 dated 20-03-2009 in full with retrospective effect.

Hence, all the Superintending Engineer/EDCs are requested to adhere all the
provisions of the TNERC Comprehensive Tariff Order on Wind Order No.1
dt.20.03.2009 in Toto with retrospective effect".

4.7. In this regard, it is relevant to note that with regard to adjustment of wind

energy for captive use is same for Order No.3 dt.15.05.2006 and Order No.1 dated

19
20.03.2009, the detailed working instructions already issued vide Circular

dated.11.12.2007 for Order No.3 dt.15.05.2006 is followed for Order No.1 of 2009

also.

4.8. The Central Electricity Regulatory Commission has notified Terms and

Conditions for recognition and issuance of Renewal Energy Certificate for

Renewable Energy Generation Regulation 2010 vide notification dated 14.01.2010,

wherein the REC benefit extended only to sale to TANGEDCO category.

Subsequently vide its notification dt.29.09.2010, the REC benefit extended for

captive generator also.

4.9. The relevant clause 5 (Amended) of the CERC Terms and conditions for

recognition and issuance of Renewable Energy Certificate for Renewable Energy

Generation Regulations, 2010, describes the eligibility criteria for issuance of REC

as under:-

“(i) It sells electricity generated either (i) to the distribution licensee of the
area in which the eligible entity is located, at a price not exceeding the
pooled cost of power purchase of such distribution licensee, or (ii) to
any other licensee or to an open access consumer at a mutually
agreed price, or through power exchange at market determined price.

(ii) Provided that a Captive Power Producer (CPP) based on renewable

energy sources shall be eligible for the entire energy generated from
such plant including self-consumption for participating in the REC
scheme subject to the condition that such CPP has not availed or
does not proposed to avail any benefit in the form of concessional /
promotional transmission or wheeling charges, banking facility benefit
and waiver of electricity duty”.
.
20
4.10. From the above, the REC generator can sell the electricity generated either

(i) to the distribution licensee of the area in which the eligible entity is located, at a

price not exceeding the pooled cost of power purchase of such distribution

licensee, or (ii) to any other licensee or to an open access consumer at a mutually

agreed price, or through power exchange at market determined price.

4.11. With regard to wheeling and adjustment of wind energy is concerned, as

there is no major change in the Tariff Order No.3 dated 15.05.2006 and Order

No.1, dated .20.03.2009, a detailed working procedure already issued on

11.12.2007 issued for Order No.3, dt.15.05.2006 is utilized for Order No.1

dt.20.03.2009 also. As such for Order No.3 dt.15.05.2006 there are two tariff rate

i.e, Rs.2.75 & Rs.2.90/unit and for Order No.1, dt.20.03.2009 one rate Rs.3.39/-

unit. If a captive generator having the above 3 type of WEGs and wheels for his HT

service, the instruction was the higher tariff rate i.e. Rs.3.39/unit to be adjusted first,

Rs.2.90/unit to be adjusted second and Rs.2.75/unit is the last. At the end of the

banking period, for the unutilized banked energy, the 75% (or) 100% payment is

being made with lower tariff rate of Rs.2.75/unit. This was the procedure adopted

for Order No.3, dt.15.05.2006 and Order No.1.dt.20.03.2009.

4.12. The petitioner is having some of its WF HT Services under preferential tariff

and other WF HT services under REC. The petitioner entered EWA and adjusting

the energy in their HT service No.203 of Madurai EDC.

4.13. Under Tariff Order No.3, dt,15.05.2006 and Order No.1, dt.20.03.2009, the

adjustment was carried out as per instructions dt: 11.12.2007 i.e, the higher tariff

rate units to be adjusted first to be banked. For the unutilized banked energy the
21
lower tariff rate was paid. The petitioner had accepted the payments from 2007

onwards without any dispute what so ever.

4.14. Now the Commission issued Tariff Order No.6 dt.31.07.2012. The

TANGEDCO vide its circular dt.01.09.2012 issued instructions and implemented

the above order. With regard to adjustment of wind energy from more than one

wind mill with different tariff rate is concerned, the instructions issued are that if a

consumer wheeled energy for adjustment from more than one windmill, which is

commissioned in different dates, the priority for first adjustment shall be given to the

windmill commissioned in later date and that the energy generated from the wind

mill commissioned in earlier date shall be adjusted in later.

4.15. From the above, TANGEDCO has not deviated its procedure from one order

to other.

4.16. The Commission has issued the Comprehensive Tariff Order on Wind

Energy (Order No.6 of 2012, dt.31.07.2012), wherein it has been stated with regard

to banking facility in respect of WEGs availing REC as under:

"8.2.15. With regard to WEGs availing REC, one month adjustment

period is allowed as permitted for conventional power. The unutilized
energy will get lapsed as in case of conventional power".

4.17. From the above it is clear that the WEGs availing REC does not avail any

benefit in the form of concessional /promotional transmission or wheeling charges,

banking facility benefit and waiver of electricity duty in order to avail the benefit of

REC.

22
4.18. If the banking facility has been extended to the WEGs availing REC as in the

case of WEGs non-availing REC, the petitioner might not request to adjust the REC

power in the first instance.

4.19. The background of issuance of banking facility is furnished in this regard to

establish the position of TANGEDCO. The TANGEDCO has requested the

Commission to dispense the banking facility, and the Commission in the Tariff

Order No.6 dated.31.07.2012 held as follows:

“xxx
8.2.4. In response to the public notice dated 27-04-2011, the TANGEDCO in
its letter dated 13-06-2011 has stated the following:-

"Extending the concessional promotional benefit of banking will hinder the

financial position of the TANGEDCO and hence the concessional/
promotional benefit of banking facility may be dispensed with. The surplus
energy after adjustment on every month may be paid at 75% of the
applicable power purchase cost. Further, the Electricity Act, 2003 does not
speak about banking. However, if at all, the Commission think fit the
provision of banking facility, the banking period may be fixed from
1stJanuary to 31stDecember of every year instead of 1stApril to 31stMarch.
The TANGEDCO may settle the unutilized energy at the end of the banking
period (31stDecember) at 75% of the normal purchase rate with increased
banking charges of 20%”

4.20. In their letter dated 07-12-2011, the TANGEDCO have stated that the cash

outflow for payment of unutilized banked units is increasing every year and the full

Board of TANGEDCO is in favour of dispensing with the banking provision and

requested the Commission to dispense with the banking provision not only to future

23
projects but also to the existing projects commissioned before and after 15-05-

2006.

4.21. In the additional comments furnished in letter dated 02-06-2012, the

TANGEDCO as stated the following on banking:-

(1) As stated already, the WEGs are allowed to supply power to captive
user and third party consumers in addition to sale to TANGEDCO, as has
been allowed to conventional generators. Hence, there is no need to
continue banking facility to wind sector. In fact, provision of banking is
alien to the Electricity Act, 2003 and on this ground a/one banking of wind
energy need to be dispensed with.
(2) As has been stated already, wind energy generators by virtue of
natural consequences and, fortunately, for the WEGs the wind blows
during summer season, in TANGEDCOs experience, it is seen that the
WEG generates energy, during May to September, without putting any
effort but encashes by adjustment at a later time by virtue of banking that
too when the Distribution Licensee is experiencing power deficit due to
high demand. It is an open secret that the power deficit is prevailing in
most of the States in India and of late, experiencing shortage of coal &
gas, difficulties in transportation of coal for various reasons, etc.
Therefore, it is a right time to dispense with the banking facility. In fact,
while the Wind Energy Generators withdrawing the banked energy, the
Distribution Licensee is forced to make purchase of power from open
market at much higher cost. Thereby also, the Distribution Licensee is
made to suffer financially.
(3) In addition to dispensing with the banking system, the existing
requirement on the part of Distribution Licensee to make payment for any
excess energy left over after adjustment also requires to be dispensed
with, in view of the position that WEG have been provided with all
adequate options of distributing their energy through captive use and
third party consumer in addition to Sale to TANGEDCO.
24
(4) Further provision of encashment of unutilized banked energy, leads
to additional financial burden to TANGEDCO. The quantum of unutilized
banked energy increasing every year exponentially.
In 10/2008, it was 315 MU, in 31.03.2009 it was 251.3 MU and in
31.03.2010 it was 350.658 MU. Hence cash outflow for payment of
unutilized banked units is high every year. Such dispensing with may be
made applicable to the existing WEGs and to prospective WEGs from the
date of such tariff order irrespective of the category to which it belongs.
(5) Further, as per CERC and TNERC REC Regulations, for wheeling of
wind energy for captive consumption under REC scheme, they have to
forego banking. Since TANGEDCO proposed to purchase the future wind
power from REC projects only, the banking may be dispensed with.
Further based on the recommendation of the TANGEDCO full Board
meeting held on 15.11.2011, a petition MP No.1 of 2012 filed at the
Commission to dispense the banking. However, TNERC on 16.02.2012
directed the TANGEDCO to file a fresh petition by impleading the affected
parties. Filing fresh petition is in the process.

Under the circumstances, it is suggested that the banking provision for

wind energy shall be dispensed with not only to the future projects but
also to the existing projects commissioned before and after 15.05.2006
irrespective of the tariff order to which WEG is covered and for which
necessary amendments may be effected in the existing Energy Wheeling
Agreement.

8.2.7 The Principal Secretary, Energy department Government of Tamil

Nadu vide Letter No.10369/C2/2011-3, dated 28-03-2012 addressed to
the Commission has stated that the banking provision of wind energy shall
be dispensed with not only to the future projects, but also to the existing
projects commissioned before and after 15-05-2006.

25
 However, the Commission could continue the banking in pursuant to
section 86(1)(e) of the Electricity Act 2003 to promote the renewable
energy in the State, subject to the adjustment of energy rates between
the two periods relating to banking of energy and drawal of energy from
the banking."

4.22. In view of above, the banking facility has to be dispensed since in view of the

position that WEGs have been provided with all adequate options of distributing

their energy through captive use and third party consumer in addition to sale to

TANGEDCO. In fact, while the Wind Energy Generators withdrawing the banked

energy; the Distribution Licensee is forced to make purchase of power from open

market at much higher cost. Thereby also, the Distribution Licensee is made to

suffer financially. Hence, TANGEDCO is being adopted the adjustment of priority

as follows:

“If the Wind Energy wheeled for one (or) more than one HT service at
wheeling end from more than one Wind Electric Generator and Wind Electric
Generators were commissioned before 15.05.2006 and after 15.05.2006, the
higher tariff units have to be adjusted first. For the surplus energy sale after
adjustment, the lower tariff rate has to be paid to the Generator at
Generating end………."

4.23. While factual position being so, the petition is not sustainable one. If the

above petition is allowed serious prejudice will be caused to the respondent.

4.24. Subsequently the Commission vide its RPO amendment regulations dated

29.07.2011 extended the REC benefits to captive generators also with the condition

to forego the concessional transmission charges, wheeling charges and banking

facility. Further the Commission on 28.12.2011 in M.P.No.3, 9, 11 of 2011 vide its

26
order held that the transmission charges, wheeling charges and banking in order

No.1, dated 20.03.2009 are concessional one. Hence after adjustment in the

month, the surplus energy was paid at Rs.2.37 per unit at APPC rate. While issuing

NOC to the petitioner, the same condition was imposed. Up to 31.07.2012 the

surplus units paid with the APPC rate.

4.25. In this connection it is submitted that, as per the Commission RPO

amendment Regulation dated 29.07.2011, the banking facility is not extended to

REC captive generator. Hence as per the agreement, the surplus energy after

adjustment, payment was made to the generator at APPC rate of Rs.2.54/unit up to

31.07.2012. With regard to REC project is concerned, the project under sale to

Board is governed by the CERC's REC Regulation 2010 and TNERC RPO

Regulation 2010 and TNERC Order on APPC rate. With regard to REC captive

generation is concerned up to 31.07.2012 it was governed by TNERC RPO

Regulations 2010 only. Now only it is covered under Order No.6, dt.31.07.2012.

4.26. In the recent Tariff Order No.6, dated 31.07.2012, the Commission, it is

stated that:

"8.2.15. With regard to WEGs availing REC, one month adjustment is

allowed as permitted for conventional power. The unutilized energy will get
lapsed as in the case of conventional power.”

4.27. Even in the earlier instructions dated 11.12.2007 issued by the respondent,

the adjustment of energy was ordered to be carried out in the same manner

ordered in the circular No.CFC/REV/FC/AAO/HT/D.606/12, dt.14.09.2012 (viz)

higher tariff rate units are to be adjusted first and the balance to be banked. Since,
27
the banking of energy in respect of REC scheme having been withdrawn. The

petitioner has now questioned the manner of adjustment of energy. On the other

hand, this respondent never changed the manner of adjustment right from 2007.

Hence, the above clarification is not contrary (or) deviations from the procedure

already followed from 2007 vide instruction dated 11.12.2007 and the recent

instruction dated 01.09.2012 for Order No.6, dt.31.07.2012. To have a demarcation

between project under preferential tariff and project under REC scheme, the

Commission issued direction in Order No.6, dt. 31.07.2012 to treat the surplus

energy as lapsed without giving banking facility. Hence to give banking facility to

the non REC WEGs, the energy generated by the non REC WEGs adjusted first,

with higher tariff rate at first and lower tariff rate at later. In order to give effect

direction of the Commission for REC WEGs to treat surplus energy as lapsed, the

REC units adjusted last. Even though the TANGEDCO has not deviated from the

procedure followed for adjustment from one order to other. Since the REC rate is

less than preferential tariff, in the descending order it is adjusted last.

4.28. For implementing Order No.6, dated 31.07.2012, TANGEDCO issued Order

on 01.09.2012, wherein from more than one Wind Mills commissioned in different

date, adjustment is made, it was instructed that the following to be adhered.

"If a consumer wheeled energy for adjustment from more than one windmill,
which is commissioned in different dates, the priority for first adjustment shall
be given to the windmill commissioned in later date. The energy generated
from the wind mill commissioned in earlier date shall be adjusted in later.”

4.29. The same procedure adopted for implementation of TNERC Order No.3, dt:

15.05.2006 and Order No.1, dt.20.03.2009 instructions issued on 11.12.2007.

"If the Wind Energy wheeled for one (or) more than one HT service at
wheeling end from more than one Wind Electric Generator and the Wind
Electric Generators were commissioned before 15.05.06 and after 15.05.06,
28
 the higher tariff units have to be adjusted first. For the surplus energy sale
after adjustment, the lower tariff rate has to be paid to the Generator at
Generating end. Similarly for the lapsed banked unit the lower tariff rate only
to be paid to the Generators".

4.30. For the instructions dt: 11.12.2007, there was no dispute and no objection

from the generators including the petitioner and received the payment without any

objection.

4.31. Consequent to the instruction dated 01.09.2012 issued for Order No.6,

dt.31.07.2012, Tamil Nadu Spinning Mills Association (TASMA), M/s.Madras

Cements Limited, Indian Wind Power Association (IWPA) and The Southern India

Mills Association (SIMA) have filed writ petitions No.12650/2012, 12749/2012,

12750/2012 & 12883/2012 respectively at Madurai Bench of Hon'ble High Court of

Madras and prayed to stay the circular instruction dt. 01.09.2012 and Madurai

Bench of Hon'ble High Court of Madras on 26.09.2012 has issued interim stay

order. Madurai Bench of Hon'ble High Court of Madras on 08.10.2012 directed the

TANGEDCO to file a clarificatory petition before the Commission and on

17.10.2012 extended the stay order until disposal of the petition by the

Commission, and with the said orders, the above said W.Ps stand disposed.

4.32. Based on the direction of Hon'ble High Court of Madras, a clarificatory

petition M.P. No.38 of 2012 filed by TANGEDCO before the Commission. The

Commission on 26-03-2013 has issued interim order that:

''Petition admitted. TANGEDCO is directed to host the petition in its Website.

It may also be hosted in the Commissions website. Any interested persons
may give their comments on or before 26.04.2013”.

29
4.33. As per the direction of the Commission, the TANGEDCO hosted the petition

at TANGEDCO website. The case is pending to be disposed of by the Commission.

In the above writ petitions (MD) No.12650/2012 etc. the Wind Association have not

raised objection for the above said adjustment procedure including the petitioner.

4.34. As per the provisions of the CERC‟s REC Regulations, wind power projects

installed for captive use are allowed to avail RECs on total generation including

self-consumption, provided such projects forego the concessional transmission and

wheeling charges/ losses and other benefits offered by the State

Government/SERCs. Hence, contention of the petitioner that wind energy

generated from WEGs avail REC shall be adjusted first is not legitimate and

sustainable.

4.35. In view of the facts and circumstances of the case on hand and position of

law as stated above, the petitioner has no prima facie case to further pursue the

above petition. Therefore, the petitioner is not entitled to any relief as prayed for in

the above petition. The balance of convenience is clearly in favour of the

respondents herein. Hence, considering all the above and more particularly

provision of the CERC‟s REC Regulation, the above petition is liable to be

dismissed. By dismissing the same, no prejudice will be caused to the petitioner as

he sells environment attribute of renewable energy in the form of Renewal Energy

Certificate [REC] tradable in power exchange between the floor price and

forbearance price.

5. Written submissions of the Respondent:

5.1. During the year 2012, the Commission issued a Comprehensive Tariff Order

on Wind Energy vide order No.6, dt.31.07.2012 (effect from 01.08.2012) wherein
30
the banking facility for the Wind Energy Generators [“WEGs”] commissioned under

Renewable Energy Certificate [“REC”] category has been withdrawn. REC

Category means that Renewable energy which can be converted as certificates

and traded for a value. The buyers of such renewable energy certificates [REC] will

be the users who fall short of their Renewable Purchase Obligation [RPO].On the

other hand, wind energy generators i.e. commissioned under preferential tariff

(Non-REC) were extended banking facility.

5.2. In that effect, some Electricity Distribution Circles have requested

clarifications on the adjustment priority among the WEGs having banking facility

and not having banking facility (i.e. between REC and non-REC category). Based

on that, a clarification was issued vide Lr.No.CFC/FC/REV/AAO/HT/D.606/2012,

dated 14.09.2012 to adjust the energy wheeled from the WEGs with banking facility

first and other WEGs later Aggrieved to the above circular, M/s. Century Floor Mills

had filed a Dispute Resolution Petition before the Commission vide Dispute

Resolution Petition No.19 of 2013 and the Commission has passed the order on

19.01.2015. Operative portion of the order is re-produced below:

“ xxxxx
5.6. The Commission has not issued any specific instruction for fixing
the priority of adjustment at the user end for the energy generated from
WEGs under REC scheme and WEG’s under normal captive / third party
scheme. The priority imposed by the TANGEDCO vide its letter dated 14-
09-2012 for adjustment of energy in this case is arbitrary. Since such
decision of the TANGEDCO affects the electricity charges to be paid by
the consumers / open access consumers, the TANGEDCO’s letter dated
14-09-2012 is not legally valid as mandated by Section 45 of the
Electricity Act 2003. In the absence of expressed law, the best option for
the TANGEDCO should have been approaching the Commission for
issue of such orders. This has not been done by the TANGEDCO.
Therefore we have no hesitation to declare that the TANGEDCO’s letter
No.CEC/FC/REV/AAO/HT/D.606/2012, dated 14-09-2012 is arbitrary and
not legally valid.
5.7. xxxxx”.

31
5.3. Pursuant to the above, Tamil Nadu Generation and Distribution Corporation

Limited [“TANGEDCO”] filed an appeal before the Hon‟ble APTEL vide Appeal No.

53 of 2016 and I.A No.138 of 2016. Meantime, the Commission in its order vide

R.A.No.6 of 2013, dt.31.03.2016 has extended the banking benefit for the REC

generators also though the original order dt.31.07.2012 did not provide 12 months

banking for such category. However, the Hon‟ble APTEL passed order on

23.09.2016 by upholding the Commission‟s order. The Operative portion of the

order is also re-produced below:

“….We are of the considered opinion that the issues raised in the
present Appeal have no merits and Appeal and I.A. are hereby dismissed.
The Impugned Order dated 19.01.2015 passed by the State Commission
is hereby upheld.”

5.4. The Commission initiated R.A. No. 6 of 2013 pursuant to the Orders of the

Hon‟ble APTEL dated.24.05.2013 made in Appeal No. 197,198, 200, 201, 208 of

2012 and Appeal No. 6 of 2013 and passed an Order dated 31.03.2016 in R.A. No.

6 of 2013 and the Comprehensive Wind Energy Tariff Order No. 3 of 2016 dated

31.03.2016 which is effective from 01.08.2012 to 31.03.2016 and from 01.04.2016

respectively, in respect of REC WEGs extended the banking provision for one year

at par with the WEGs under preferential tariff and TANGECO has implemented the

said Order No. 3 dated 31.03.2016 vide Memo No. CE/NCES/ SE/EE/ WPP/ AEE2/

F.Order No. 3, dated 31.03.2016/ D.1553/2016 dt. 18.08.2016 and the said position

has been submitted before the APTEL during course of the hearing and also

pleaded by filing Written Submission, to dispose off the appeal by granting liberty to

the TANGEDCO to file Miscellaneous Petition before the Commission for framing

regulations in connection with priority of adjustment between the all sources of

energy such as Fossil Fuel, IEX, Wind, Solar etc.,

32
5.5. However, the Hon‟ble APTEL has not considered the said changes in vital

issue and also not passed any remarks in this issue in the judgment. On the other

hand, it has been ordered erroneously that in respect of the WEGs under REC,

energy after one month shall be available to TANGEDCO at the free of cost giving

un-due benefit to the Appellant. In view of WEGs under REC scheme have the

banking provision at par with the WEGs under preferential tariff which has a

banking provision of one year with effective from 01.08.2012. Therefore, the said

observation is against the core of the issue in the present case and said

observation may be termed as mistake of fact and error on the face of the record.

5.6. Considering the above fallacy and the failure of the Hon‟ble APTEL in

noticing its own previous Order dated 24.05.2013 and also the Commission‟s Order

dated 31.03.2016 in R.A. No. 6 of 2013 and Comprehensive Wind Energy Tariff

Order while deciding Appeal No. 53 of 2016, it is arguable that Impugned Order

dated 23.09.2016 is per incuriam. Therefore, the TANGEDCO could not implement

the impugned Order.

5.7. Hence, aggrieved by the above order, Civil Appeal has been filed by

TANGEDCO before this Hon‟ble Supreme Court of India vide C.A. No. 15618 of

2017 and this Hon‟ble Court has ordered (vide order dt.18.09.2017) to maintain

‟status-quo‟.

5.8. In this connection, it is relevant to mention that M/s. Ambika Cotton Mills filed

Miscellaneous Petition before the Ld TNERC vide M.P.No.14 of 2017 in the matter

33
adjustment priority between wind energy generators based on principal of First In

First Out [FIFO] method against the procedure which had been followed by

TANGEDCO that higher purchase tariff has to be adjusted first. In this regard, the

Commission passed order on 30.03.2021, the relevant portion which held as

follows:

9. Findings of the Commission:-

xxxxx
“If the consumer wheels energy for adjustment from more than one windmill,
commissioned on different dates attracting different tariffs, the priority of
adjustment shall be in descending order of applicable tariffs i.e adjustment of
energy shall be from the windmill commissioned with highest tariff first followed by
wind mills commissioned with lower tariffs. The energy from wind mill
commissioned in the control period with lowest tariff shall be adjusted last.”

5.9. TANGEDCO has filed a miscellaneous petition before the Commission vide

MP No.24 of 2021 seeking order of adjustment among various sources (viz. IEX,

3rd Party, Wind, Thermal, Solar, etc) of open access energy wheeled/purchased by

the HT consumers. The same has been admitted on 29.06.2021 and it has been

ordered to TANGEDCO to webhost the said petition and obtain the stakeholders

comments. Pursuant to the above, TANGEDCO webhosted the said petition on

03.07.2021 requesting the stakeholders to furnish their comments on or before

03.08.2021. Based on the above, the following stake holders furnished their

comments.

SL. No. Name of the Stakeholder Received on

1. Tamil Nadu Spinning Mills Association. 23.07.2021
2. Tamil Nadu Electricity Consumers‟ 24.07.2021
Association
3. The Southern India Mills‟ Association 28.07.2021
4. Tamil Nadu Power Producers Association 29.07.2021
34
 5. Thiru S.Narayanaswamy-Former Member 29.07.2021
(Generation).
6. M/s. Tulsyan NEC Ltd 30.07.2021
7. IEX-Indian Energy Exchange 03.08.2021
8. M/s. OPG Energy Pvt Ltd. 03.08.2021
9. M/s. OPG Power Generation Pvt Ltd. 03.08.2021
10. Thiru A.D. Thirumoorthy- Member State 03.08.2021
Working Group on RE
11. Indian Wind Power Association 03.08.2021
12. M/s. Watsun Infrabuild Private Limited. 03.08.2021

The above stakeholder‟s comments have been submitted on 11.08.2021 before the

Commission. Further, it is stated that while hearing of the said Civil Appeal, the

Hon‟ble Supreme Court of India passed an order on 15.02.2022, the relevant

portion which held as follows:

ORDER
We are pained to note that despite our noticing in the order,
dated 25.01.2022 that the Regulations to be put in place is an
aspect of utmost urgency and for the counsel for respondent
No. 2 to take instructions in that behalf considering that the
stakeholders had given their suggestions by 03.08.2021
and almost six months have expired, we are now
informed that the Regulators will need another eight weeks
for the said purpose. We seek to emphasize to the
Regulators the importance of their function which they are
required to perform and should perform andthis kind of hiatus
of time period does not reflect well. We give the Regulators,
the last opportunity to bring the fresh Regulations in place
on or before 31.03.2022.
We are conscious that the Regulations will apply prospectively
but learned counsel agree that this may reflect to some
extent, the approach of the Commission on the aspect in
question.
List for directions on 06.04.2022.

35
 The Regulations duly notified to be placed before us by that
date.

5.10. In continuation to the above, the Hon‟ble Supreme Court of India passed an
order on 11.04.2022, the relevant portion which held as follows:

ORDER

We are informed that the amended regulations have

been notified on 16th March, 2022 have been gazetted/published on
21st March, 2022. Copy of the notification is taken on record.
Learned counsel for the respondent No.1 states that
at least prospectively the stand of respondent No.1 stands
vindicated and thus the only issue is whether it should apply for the
past.
In view of the aforesaid development, we call upon the
appellant(s) to examine the aforesaid submission in the larger context
so that a quietus can be put to the lis.
Learned senior counsel is granted four weeks’ time for
the said purpose.
List for directions on 18th July, 2022 and if there is no
favorable view taken, though we expect otherwise, we will set it
down for hearing in the week commencing 19th July, 2022.

From the above, the only issue which is pending before the Hon‟ble Supreme Court

of India is whether it should apply for the past. In this regard, TANGEDCO filed

affidavit before the Hon‟ble Supreme Court of India on 25.08.2022. Based on the

above, the Hon‟ble Supreme Court of India passed following order on 26.08.2022:

ORDER
An affidavit has been filed on 25.08.2022/affirmed on 18.08.2022 on behalf
of the appellant Para 7 of the affidavit reads as under:
“ It is submitted that the appellant is following certain procedure of
adjustment right from the year 2008 which is one and the same as ordered
by the Ld. TNERC vide notification dated 21.03.2022. With regard to the
priority among WEGs under REC and Non- REC, the appellant is following
the order of the Ld.TNERC dated 19.01.2015 in D.R.P.No.19 of 2013. In

36
 this connection, it is relevant to mention that the Respondents herein had
also not disputed the adjustment procedure. Hence, it is respectfully
submitted that it may be construed that the appellant has adopted
procedure laid down in the notification dated 21.03.2022 for adjustment
priority among WEGs under REC and Non-REC with effect from 01.08.2012
retrospectively. Per contra, the abovementioned notification dated
21.03.2022 shall be adopted prospectively for other energy sources of the
High Tension consumers.”

In view of the aforesaid, the matter can be disposed of in terms of the

aforesaid paragraph as no further lis survives.

5.11. In view of the above reasons stated, it is humbly prayed that this

Commission is pleased to dispose of the above petitions based on above

mentioned lines and pass such further or other orders as this Commission may

deem it fit and proper and thus render Justice.

6. Findings of the Commission:-

6.1. This Commission issued the Comprehensive Tariff order on Wind Energy in

T.O. No.6 of 2012 dated 31.07.2012. Consequent to this Tariff order, TANGEDCO

issued a clarificatory working instructions vide Circular No.CFC/Rev/FC/AAO/HT/

D.606/12, dated 14.09.2012 with regard to adjustment of Wind energy generated

by the windmills covered under REC scheme. Aggrieved by the Circular dated

14.09.2012, the petitioner has filed this petition to stay the implementation of the

circular and all proceedings pursuant thereto including the Excess demand/energy

charges calculated on the basis of this letter and also sought direction to the

TANGEDCO to first effect adjustment of the wind energy generated from the

petitioner‟s captive windmills operating under the Renewable Energy Certificate

(REC) scheme against the petitioner‟s service and thereafter adjust the energy

generated by the other Windmills.

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6.2. The operative portion of the TANGEDCO‟s letter (dt.14.09.2012) challenged

by the petitioner is reproduced below -

a. The TNERC order on wind energy and order on REC does not have any
provision in regard to adjustment priority of banked energy and REC power.

b. The TANGEDCO in principle adopting the procedure of adjusting the high

cost power first and lesser cost power on later date i.e. the first priority given
for power generator from the later date agreement and vice versa.

c. In clause 8.2.15 of TNERC Order No.6 dated 31-07-2012 on Wind Energy

issued by the Hon’ble TNERC specified that Wind Energy Generators availing
REC one month adjustment period is allowed as permitted for conventional
power. The unutilized energy will get lapsed as in the case of conventional
power.

d. As long as the banking facilities are not extended to the WEG availing REC,
this power will become cheaper than the power generated from the WEG
availing banking facilities.

e. The Wind Energy Generator who avail banking facilities can utilize their
banked energy during the period of power scarcity and TANGEDCO is liable to
supply power to them by procuring in the open market at higher cost and
hence this power is costlier than power generated from Wind Energy Generator
availing REC.

f. In line with the above, the higher cost power has to be adjusted first (i.e.)
Wind Energy generated from wind mills with banking facilities and lesser cost
power shall be adjusted later i.e. Wind Energy generated from wind mills under
REC.

Hence, it is clarified that the wind energy generated by wind mills with banking
facility shall be adjusted first and the wind energy generated from wind mills
under REC shall be adjusted later.”

6.3. It is contended by the petitioner with reference to the Comprehensive Tariff

Order No.6 dated 31.07.2012 that, if any generator already has wind mills under

the preferential regime installed, adjustment of units from Windmills under the

preferential regime prior to the adjustment of units generated by Windmills under

38
the REC scheme would result in a situation contrary to the express purpose and

intention of the REC scheme i.e., encourage investment in market determined

NCES and generators would, therefore, continue to invest only in preferential tariff

based wind energy generators. Moreover, the clarification issued by the

TANGEDCO itself admits that there is no priority stipulation from the Commission

regarding which energy to be adjusted first. Before arriving at such conclusion the

respondent ought to have approached this Commission. The REC power plant‟s

generation attracts 60% more charges as Transmission charges, Scheduling and

System Operation charges, Wheeling charges etc., Since the generation of REC

power attracts levying of higher charges and it is also liable to lapse if not adjusted,

it should be adjusted first.

6.4. The Respondent has stated that even in the earlier instructions dated

11.12.2007 issued by the respondent, the adjustment of energy was ordered to be

carried out in the same manner as ordered in the circular No. CFC/Rev/ FC/AAO/

HT/D.606/12, dt.14.09.2012 (viz.,) with higher tariff rate units are to be adjusted first

and the balance to be banked. Since, the banking of energy in respect of REC

scheme having been withdrawn, the petitioner has now questioned the manner of

adjustment of energy. On the other hand, the respondent never changed the

manner of adjustment right from 2007. Hence the circular dated 14.09.2012 is not

contrary or inconsistent with the procedure already followed from 2007 vide

instruction dated 11.12.2007 and subsequent instruction dated 01.09.2012 for

Order No.6, dt.31.07.2012. Further, no prejudice will be caused to the petitioner as

he sells environment attributes of renewable energy in the form of Renewable

Energy Certificate (REC) tradable in the Power Exchanges between the floor price

and the forbearance price.

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6.5. In order to deal with this issue, it would be pertinent to refer to the Order

passed by this Commission in D.R.P.No.19 of 2013 (M/s.Century Flour Mills Ltd.,

Vs TANGEDCO) dated 19.01.2015, a case similar to the case on hand, wherein the

Commission held as follows -

5.5. ..... On the other hand, the respondent’s letter dated 14-09-2012
compares notional cost of energy to be adjusted under REC scheme with the
preferential tariff of other WEGs for fixing the priority for adjustment of energy
generated by the WEGs under different schemes. However both the
TANGEDCO’s circular dated 11-12-2007 and the letter dated 14-09-2012
have not been approved by the Commission.

5.6. The Commission has not issued any specific instruction for fixing the
priority of adjustment at the user end for the energy generated from WEGs
under REC scheme and WEG’s under normal captive / third party scheme.
The priority imposed by the TANGEDCO vide its letter dated 14-09-2012 for
adjustment of energy in this case is arbitrary. Since such decision of the
TANGEDCO affects the electricity charges to be paid by the consumers /
open access consumers, the TANGEDCO’s letter dated 14-09-2012 is not
legally valid as mandated by Section 45 of the Electricity Act 2003. In the
absence of expressed law, the best option for the TANGEDCO should have
been approaching the Commission for issue of such orders. This has not
been done by the TANGEDCO. Therefore we have no hesitation to declare
that the TANGEDCO’s letter No.CEC/ FC/ REV/AAO/HT/D.606/2012, dated
14-09-2012 is arbitrary and not legally valid.

5.7. .....we Order that the TANGEDCO shall first adjust the wheeled energy
generated from the petitioner’s WEG under REC scheme which has an
adjustment or banking period of one month and then adjust the energy
generated from other captive / third party generators which have a banking
period of one year. The TANGEDCO is directed to revise the bill of the
petitioner based on the energy adjustment priority specified in this Order and
40
 settle the account within a period of three months from the date of issue of
this order.”

6.6. The appeal preferred by the TANGEDCO before the Hon‟ble Appellate

Tribunal for Electricity against the Order of the Commission was disposed by the

Hon‟ble APTEL vide order dated 23.09.2016 passed in Appeal No. 53 of 2016. The

relevant portion of the order is as follows:-

“11. xxxx xxxx xxxx

a) xxxx xxxx xxxx
viii) xxxx xxxx xxxx
From the above, it becomes clear that while Regulation 8 specifies
various aspects of captive use and third party sale, there is no specific
mechanism of adjustment priority of REC and Preferential mechanism of
Wind Energy. However, the State Commission can address such mode
of adjustment matter under category (12) i.e. any other related issues.

ix. As per the provisions of the Section 61(h) and Section 86(1)(e) of the
Act, one of the functions of the State Commission is to provide measures
for promotion of renewable energy. Considering the facts specified in the
Impugned Order and the provisions of the Act, we are of the considered
opinion that the State Commission has rightly held that the
communication dated 14.09.2012 issued by CFC, TANGEDCO regarding
adjustment priority is not legally valid. Further on the question that
whether the State Commission can pass an order specifying the mode of
adjustment, we reply in affirmative. The State Commission in its
Impugned Order has specified the mode of adjustment which is in line
with the Regulation 8 of the “Power Procurement from New and
Renewable Sources of Energy Regulations 2008.

x. Hence this issue is decided against the Appellant.

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 b) On the second issue for our consideration i.e. Whether the State
Commission is required to amend the Regulations relating to procurement of
wind energy and related issues?, we observe as follows;

i. The State Commission in the Impugned Order acknowledged that there is

no specific instruction regarding adjustment of energy from Wind
Generators under REC and preferential mechanism. The State
Commission has further stated that in the absence of expressed law, the
Appellant must have approached the State Commission for further orders.
ii. We have already held that the Regulation 8 of the “Power Procurement
from New and Renewable Sources of Energy Regulations 2008” gives
power to the State Commission to decide on the issue of mode of
adjustment of wind energy of REC and Preferential mechanism.
iii. In view of above, this issue is decided against the Appellant.”

6.7. Aggrieved by the above order, the TANGEDCO preferred an appeal before

the Hon‟ble Supreme Court of India in Civil Appeal No.15618/2017. In the course

of hearing the appeal, the Apex court directed, the Commission to bring out the

regulations on adjustment in the first instance.

6.8. As the Commission was already in the process of effecting amendment in

the TNERC (Grid Connectivity and Intra State Open Access) Regulations 2014, in

the matter of fixing priority of adjustment of energy drawn by the Open Access

consumer from different sources, it was notified vide Notn.No. TNERC/ISOA/ 11/2-

1, dated 16.3.2022 (Gazetted dated 21st March 2022).

6.9. In the Appeal C.A.No.15618/2017 then pending before the Hon‟ble Supreme

Court of India, TANGEDCO filed an affidavit, and based on that the Apex Court

passed the following Order on 26.08.2022,

42
 “ORDER
An affidavit has been filed on 25.08.2022/affirmed on 18.08.2022 on behalf
of the appellant Para 7 of the affidavit reads as under:
“ It is submitted that the appellant is following certain procedure of
adjustment right from the year 2008 which is one and the same as ordered
by the Ld. TNERC vide notification dated 21.03.2022. With regard to the
priority among WEGs under REC and Non- REC, the appellant is following
the order of the Ld. TNERC dated 19.01.2015 in D.R.P.No.19 of 2013. In
this connection, it is relevant to mention that the Respondents herein had
also not disputed the adjustment procedure. Hence, it is respectfully
submitted that it may be construed that the appellant has adopted
procedure laid down in the notification dated 21.03.2022 for adjustment
priority among WEGs under REC and Non-REC with effect from
01.08.2012 retrospectively. Per contra, the abovementioned notification
dated 21.03.2022 shall be adopted prospectively for other energy sources
of the High Tension consumers.”

In view of the aforesaid, the matter can be disposed of in terms of the

aforesaid paragraph as no further lis survives.”

6.10. The order passed by the Hon‟ble APTEL in Appeal No. 53 of 2016 dated

23-09-2016 and the order passed by the Hon‟ble Supreme Court in C.A. No. 15618

/2017 dated 26-08-2022 not only confirmed the order passed by TNERC in D.R.P.

No. 19 of 2013 dated 19-01-2015 but also approved the procedure recommended

by the Commission with regard to adjustment priority among WEG‟s under REC

and Non-REC Schemes. Further in the affidavit, TANGEDCO has candidly

admitted that the procedures are adopted retrospectively with effect from

01-08-2012 in respect of wind mill generators.

6.11. Hence, the prayer of the petitioner to stay the operation of letter no. CFC/FC/

Rev/AAO/HT/ D.606/2012, dated 14.09.2012 and effecting of adjustment of energy

generated by the WEGs under REC scheme, by now is a settled issue as the

method prescribed by the Commission in D.R.P.19 of 2013 is being adopted by the

Respondent. Resultantly the Commission hereby passes the following order.

43
 ORDER

This Commission directs that the wind energy generated from the

Petitioner‟s WEG‟s under REC Scheme during the period covered under the

present petition shall first be adjusted by the TANGEDCO in the Petitioner‟s HT SC

203 as against the other generators and such adjustment shall be made within a

month from the date of this order. The TANGEDCO shall revise / raise the current

consumption charges for the relevant period as per this order. No order as to cost.

(Sd........) (Sd......) (Sd......)

Member (Legal) Member Chairman

/True Copy /

Secretary
Tamil Nadu Electricity
Regulatory Commission

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