In what can be considered a moral victory for the YSR Congress party government headed by Y S Jagan Mohan Reddy, the Andhra Pradesh high court on Tuesday justified its right to seek renegotiation of power purchase agreements signed with solar and wind power producers during the Telugu Desam Party regime.
In its judgement, the state high court dismissed the petition of the solar and wind energy companies opposing renegotiation of tariffs by the state to approach state electricity regulatory commission, which has the powers to decide on the PPAs.
The court rejected the argument of power producers that the government could not review the PPAs. But it felt that such a review should be done by the AP Electricity Regulatory Commission.
Technically, it is a victory for the Jagan government, but the court struck down its GO No. 63 dated July 1, which appointed an expert committee to renegotiate the PPAs.
In a way, the court felt that the government cannot itself terminate the contracts with the power producers, but it should approach the regulator.
Since the government submitted a petition in the court that it will approach the APERC, the court struck down the GO, as well as the power companies’ petition opposing the review.
The high court told the government as well as power companies to make their arguments before the APERC, as the high court can’t confirm the decisions taken by APERC.
The court, however, told the APERC to finalise the issue within six months.
The power companies also got a relief from the court, which ordered the government to pay immediately tariff at Rs 2.44 per unit till the disposal of the matter by APERC.
It has also directed the state to avoid curtailing generation from Renew Power plants without issuing any prior notice.
During the hearings, the companies sought the Andhra Pradesh government order dated July 1 to be quashed.
The companies argued that the state government had no say in the contracts which were signed between the distribution companies and the developers.
The Andhra Pradesh government argued that the high cost PPAs were difficult to be honoured and the tariffs had to be revised downwards.
Andhra Pradesh government had in a previous hearing told the high court it has realised that renewable power contracts with developers cannot be terminated and was embarrassed by its move towards this, but said power purchase agreements need to be renegotiated.
The Andhra Pradesh order, issued on July 1, had directed a high-level committee to renegotiate agreements and submit report to the state in 45 days.
Later on July 12, the Southern Andhra Power Distribution Company sent letters to 139 power plants asking wind plant to revise tariff to Rs 2.43 per unit and solar plants to reduce the price to Rs 2.44 per unit retrospectively.
The Andhra Pradesh high court had on July 25 stayed the state government's July 1 order in a case filed by renewable energy companies against renegotiation of all power supply contracts.
