- (1.) Indian Wind Power Association - Maharashtra State Council (IWPA -MSC) has filed a Petition on 30 June, 2014 under Sections 129, 142 and 149 of the Electricity Act (EA), 2003 seeking Clarification of the MERC Order dated 20 June, 2014 in Case No. 93 of 2013 read with the MERC Order dated 7 April, 2014 in Case No. 92 of 2012 and the revised Energy Purchase Agreement (EPA) of the Maharashtra State Electricity Distribution Company Ltd. (MSEDCL)
(2.) Main prayers of IWPA -MSC are as below: a. Clarify whether the Order dated June 20, 2014 in Case no. 93 of 2013 in the matter of sanctioning the clauses of right of first refusal {section 4.03 of the EPA} post expiry of EPA of 13 years exclusively reserved to MSEDCL, payment for generation proceeds on best effort basis by MSEDCL and not to remit delayed payment interest for the generation effected up to September 30, 2013 {proviso to section 11.04 of the EPA} applies only to the Energy Purchase Agreements executed by the wind energy generators till the date of the said Order and not to all the Energy Purchase Agreements pending to be executed for projects commissioned in FY 2013 -14 and also for future financial years from 2014 -15 onwards ; b. Direct the Respondent No.1 to delete the modified clauses viz. section 4.03 and proviso to section 11.04 of the EPA detailed above from the Energy Purchase Agreement to be executed with wind generators after the date of the Order and effect payments taking 60 days from JMR as date of invoice since the wind generators could not raise invoices for want of Energy Purchase Agreement though they were ready to execute agreement without the said sections as per MERC RE Tariff Regulations; c. Direct MSEDCL not to discriminate between wind energy generators who accept the aforesaid sections / clauses viz. section 4.03 and proviso to section 11.04 of the EPA and those wind energy generators who abiding by the Regulations of the Commission, provisions of EA, 2003 and the earlier relevant orders of the Commission and Hon'ble APTEL desire the deletion of said sections / clauses viz. section 4.03 and proviso to section 11.04 from the EPA to be executed. d. Award costs of these proceedings against the Respondent and in favour of the Petitioner; e. Pass such other order(s) as the Commission may deem just in the facts of the present case. IWPA -MSC has made following Interim Prayers; In the circumstances, it is respectfully prayed that pendente lite the final order, the Commission may be pleased to: a. Pass an ad -interim ex -parte order of stay of the operation of the Impugned Order qua the Petitioner and the members of the Petitioner and confirm the above order after notice to the Respondents; and b. Pass such other order(s) as the Hon'ble Commission may deem just in the facts of the present case.
(3.) The facts as stated in the Petition are as follows: 3.1 As per the Commission's Orders dated 20 November, 2007, 7 October, 2008 and 10 December, 2008, absolute freedom has been provided to Wind farm developers to sell power to any consumers post expiry of their EPA with the Distribution Licensee subject to their complying with relevant Regulations of open access and making payment of stipulated charges of wheeling loss, wheeling charges, transmission loss, transmission charges, cross subsidy surcharge etc. 3.2 IWPA submitted that, in Case No.92 of 2012, the Commission has stated that for Projects who's EPA have not expired may be given an option to extend EPA to Project life and such an extension will be an option available to both Parties and not a compulsion. 3.3 As per the Regulation 6 of MERC (RE Tariff) Regulations, 2010, the tariff period for Wind energy project shall be thirteen years, so the generator is bound to sell at the tariff determined by the Commission only for such period and hence the EPA is also executed for such period only i.e 13 years. But MSEDCL has delayed the process of entering into EPA and delayed payment without interest and further modified the EPA. 3.4 It is submitted that, with the inclusion of the clause on right of first refusal by MSEDCL in the EPA and then operation of that right is contrary to Section 10 (2), 42(2) and 49 of the Electricity Act, 2003. Further, vide Order dated 7 November, 2007 in Case No.85 of 2006, the Commission revised the paragraph 3.58 of the Order dated 9 November, 2005 in Case No. 25 of 2004 which states as below: "Sale of Power 3.58 Generated electricity can be sold to any consumer located in the state of Maharashtra or any willing distribution licensee or any power trading company. There shall be no limitation on the supply of energy units by the Developer to the Distribution Licensees. Sale of power shall be in accordance with the Orders, Regulations and Directions of the Commission" The Commission removed the words "However Maharashtra State Electricity Distribution Company shall have the first right of refusal" appeared in the same paragraph through this Order. 3.5 Further the Commission vide its Order dated 7 April, 2014 in Case No.92 of 2012 provides for right of the generator to sell power to any party other than MSEDCL post expiry of the EPA as has been reiterated a number of times by the Commission in its various Orders and also option to sell to MSEDCL post expiry of EPA shall be with both the parties i.e. generator as well as MSEDCL and shall be entitled to seek extension of the EPA if mutually agreeable and is not a compulsion to either parties. 3.6 Further in one of the written submissions dated 24 December, 2013 in Case No.93 of 2013, IWPA expressly prayed for deletion of the contentious clauses included in the EPA by MSEDCL without any authority viz. reserving first right of refusal and non -payment of interest for the period up to 30 September, 2013 and payment for generation being on best effort basis without interest. The contentious sections / clauses referred are Section 4.03: After completion of EPA tenure of 13 years from the date of commissioning of the wind power projects, MSEDCL shall reserve First Right of Refusal to procure power at the same rate {MERC determined tariff as may be applicable for the said wind power project as per MERC RE Tariff order dated March 22, 2013 in case no.6 of 2013} or the rate as may be decided by the MERC whichever is lower till the end of life of wind power project {i.e. 20 / 25 years as the case may be} Section 11.04 ­ Proviso: Provided that the payments to the Seller for the period from the date of commissioning of the project up to September 30, 2013 will not be governed by clause / section no.11.04 of the EPA. The payment for this period will be effected by MSEDCL on the best effort basis without interest. 3.7 It is submitted that the Supreme Court of India in its judgment in Central Inland Water Transport Corporation Limited Versus Brojo Nath Ganguly reported in AIR 1986 Supreme Court 1571, relied on the House of Lord's decision in photo Production Limited versus Securicor Transport Limited (1980) Appeal Cases Page No.827 and laid down the principle that Court will not enforce and will, when called upon to do so, strike down an unfair and unreasonable clause in a contract, entered in to between parties who are not equal in bargaining. .......................... This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporation with their vast infra -structural organisations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances". In view of aforesaid, the Commission ought to have struck down the clauses included by MSEDCL without sanction of the Commission rather than accepting or giving it a sanction on the grounds of it being accepted by the parties with unequal bargaining power. 3.8 Further, in the case of LIC of India and Anr. V/s Consumer Education and Research Centre and others, (1995) 5 SCC 482, it has been held by the Supreme Court that merely because the party who is weaker entered into a contract with unfair terms having no other option except to sign the contract, it cannot be said to be valid a contract or valid clause. 3.9 MSEDCL, prima facie, including such clauses, without sanction of the Commission is trying to usurp the powers of the Commission and by inclusion thereof and compelling the wind generators to sign EPA with modified clauses is arbitrary and against the interest of wind farm developers. 3.10 MSEDCL by including such clauses, denying interest and delaying payments, has been trying to dis -incentivise the renewable energy generators and driving away investments in wind energy generation from the state of Maharashtra. The wind energy generators have at first instance unable to fetch single paisa due to multiplicity of proceedings for the tariff for the FY 2013 -14 and now with inclusion of such clauses they will be at the mercy of MSEDCL for realizing payment. The projects commissioned are funded and such loan attracts interest. Non - payment/delayed payment without interest with MSEDCL will lead to such projects being unviable. 3.11 Further, as the power is being injected in the grid and is distributed by MSEDCL and further payment for energy realized by MSEDCL and hence denial of payment of interest is unjustified, arbitrary and not in consonance with various Orders referred and relied upon by IWPA -MSC in the proceedings before the Commission in Case No. 93 of 2013. Mere inclusion of clause in EPA and acceptance thereof by a party with unequal bargaining power does not substantiate any legal principles or also principles of equity and natural justice. 3.12 There is a need to clarify that in the light of the Order dated 20 June, 2014 in Case No. 93 of 2013, whether such modified EPA is applicable to EPAs already signed till date or also to EPAs pending execution for projects commissioned in FY 2013 - 14 and further its applicability for projects commissioned from F.Y. 2014 -15 onwards. 3.13 In absence of specific clarification the aforesaid Order may be made applicable by MSEDCL to all the wind energy generators whose projects are commissioned in FY 2013 -14 and in prospective years as well particularly considering the hostile attitude of MSEDCL to wind power. Therefore in the interest of law and justice the Commission may clarify, so that the developers are clear as to what is in store for them in the PPA that would be executed after the Order dated 20 June, 2014 in Case No. 93 of 2014 irrespective of when the projects are commissioned. ;