{"id":354541,"date":"2025-07-25T14:30:29","date_gmt":"2025-07-25T09:00:29","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=354541"},"modified":"2025-08-08T09:26:53","modified_gmt":"2025-08-08T03:56:53","slug":"cerc-on-compensation-to-db-power-ltd-over-changes-in-law","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2025\/07\/25\/cerc-on-compensation-to-db-power-ltd-over-changes-in-law\/","title":{"rendered":"Inside CERC\u2019s ruling where DB Power Ltd. sought compensation over changes in law, force majeure events relating to Power Purchase Agreements"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Central Electricity Regulatory Commission<\/span>: The present petition was filed under Section 79(1)(b) read with Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001553561\" target=\"_blank\" rel=\"noopener\">79(1)(f)<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002782344\" target=\"_blank\" rel=\"noopener\">Electricity Act, 2003<\/a>, seeking adjustment of tariff on account of change in law and force majeure events affecting the project during the operating period to restore the petitioner, DB Power Limited, to the same economic position as the events had not occurred in terms of the Tamil Nadu Generation and Distribution Corporation Limited (\u2018TANGEDCO\u2019) Power Purchase Agreements (\u2018PPA\u2019). The three-member Bench of Jishnu Barua (\u2018Chairperson\u2019), Ramesh Babu V (\u2018Member\u2019), and Harish Dudani (\u2018Member\u2019) disposed of the present petition to the extent of remand made by the Appellate Tribunal for Electricity (\u2018APTEL\u2019) in its judgment dated 25-7-2023.<\/p>\n<h3>Background<\/h3>\n<p style=\"margin-bottom: 3%;\">The petitioner, a generating company, had set up a 1200 MW (2 x 600 MW) coal-based thermal power station at village Badadraha, District Janjgir Champa in the State of Chhattisgarh. For the supply of power from its Project, the petitioner entered into the PPA with Rajasthan Discoms for the supply of 250 MW.<\/p>\n<p style=\"margin-bottom: 3%;\">The Commission disallowed claims regarding station heat rate (\u2018SHR\u2019) and carrying cost following which, the petitioner challenged the order. The APTEL, vide its judgment dated 25-7-2023, set aside the challenged order and remanded the matter to the Commission for determination of the compensation which the petitioner was entitled to towards actual station heat rate, subject to the SHR prescribed in the applicable Tariff Regulations and for re-examination of the issues pertaining to carrying cost, and increase in VAT, Entry Tax, Niryatkar on account of increase in various levies such as NMET, and DMF, etc.<\/p>\n<h3>Analysis, Law, and Decision<\/h3>\n<p>The issues decided in the present case were as follows:<\/p>\n<p style=\"font-weight: bold;\">Issue 1 &#8211; Increase in VAT, Entry Tax, and Niryatkar on account of the increase in various levies such as NMET, DMF, etc.<\/p>\n<p style=\"margin-bottom: 3%;\">The Commission held that the petitioner shall be eligible to recover the additional expenditure incurred towards the consequential increase in VAT, Entry Tax, and Niryatkar on account of increase in the underlying taxes and duties on which the VAT, Entry Tax, and Niryatkar were computed provided these taxes and duties were recognised as change in law. Further, the consequential increase in VAT, Entry Tax, and Niryatkar on account of introduction\/increase in rates of levies such as NMET, DMF, etc., which was recognized as a change in law, would be recoverable from the respondent.<\/p>\n<p style=\"font-weight: bold;\">Issue 2 &#8211; Station Heat Rate<\/p>\n<p style=\"margin-bottom: 3%;\">The Commission observed that the petitioner had claimed a revised differential compensation of Rs 19,41,81,854 which include components such as National Mineral Exploration Trust (NMET), District Mineral Foundation (DMF), Chhattisgarh Development Tax, Chhattisgarh Environment Tax, Clean Energy\/Environment Cess, Service Tax\/GST on Transportation, and undersupply of coal from SECL. Further, the Commission noted that the respondent did not contest the claim or the methodology adopted by the petitioner, thus the claim was found to be admissible.<\/p>\n<p style=\"font-weight: bold;\">Issue 3 &#8211; Carrying Cost<\/p>\n<p style=\"margin-bottom: 3%;\">After taking into consideration the observations of APTEL in <span style=\"font-style: italic;\">Essar Power Gujarat Ltd.<\/span> v. <span style=\"font-style: italic;\">Gujarat ERC<\/span>, Appeal No. 842 of 2023, dated 16-4-2025, and the fact that the actual interest rates on the working capital arranged by the petitioner was lower than the LPS rates, the Commission permitted the petitioner to claim the carrying cost at the actual rate of interest on the working capital arranged by the petitioner. Further, regarding the simple or compound interest and frequency of rests in case of compound interest, the Commission stated that they should be in line with the applicable interest on working capital arranged by the petitioner.<\/p>\n<p style=\"margin-bottom: 3%;\">The Commision held that the parties shall reconcile the petitioner\u2019s entitlement to the various compensation allowed by the present order, including the carrying cost.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\">DB Power Ltd. v. PTC India Ltd., <a href=\"http:\/\/www.scconline.com\/DocumentLink\/0200qEQH\" target=\"_blank\" rel=\"noopener\">2025 SCC OnLine CERC 58<\/a>, decided on 15-7-2025<\/span>]<\/p>\n<hr \/>\n<p>Advocates who appeared in this case:<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For Petitioner:<\/span> Deepak Khurana, Advocate and Nishtha Wadhwa, Advocate<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For Respondents:<\/span> Anusha Nagarajan, Advocate and Swapna Seshadri, Advocate<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">The Appellate Tribunal for Electricity had remanded matter to Central Electricity Regulatory Commission to reconsider issues pertaining to station heat rate, carrying cost, and increase in VAT, Entry Tax, etc. due to change in law, force majeure events affecting petitioner&#8217;s project.<\/p>\n","protected":false},"author":67011,"featured_media":354556,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,11],"tags":[51211,2652,85973,85977,85976,34660,85975,85974,35306],"class_list":["post-354541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-tribunals_commissions_regulatorybodies","tag-carrying-cost","tag-Central_Electricity_Regulatory_Commission","tag-chairperson-jishnu-barua","tag-compensation-force-majure","tag-compensation-over-change-in-law","tag-electricity-act-2003","tag-member-harish-dudani","tag-member-ramesh-babu-v","tag-power-purchase-agreements"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CERC on compensation to DB Power Ltd. over 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| Electricity Transmission Agreement \u2013 Successful bidder can claim relief only if conditions stipulated in agreement are followed","author":"Bhumika Indulia","date":"April 18, 2019","format":false,"excerpt":"Central Electricity Regulatory Commission (CERC): The coram of P.K Pujari (Chairperson) and Dr M.K. Iyer (Member) allowed a petition filed by a successful bidder seeking an extension of time for implementation of project awarded to him. In the instant case, a special purpose vehicle (SPV) was created in the name\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/02\/Central-Electricity-Regulatory-Commission-%E2%80%93-CERC.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/02\/Central-Electricity-Regulatory-Commission-%E2%80%93-CERC.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/02\/Central-Electricity-Regulatory-Commission-%E2%80%93-CERC.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/02\/Central-Electricity-Regulatory-Commission-%E2%80%93-CERC.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2019\/02\/Central-Electricity-Regulatory-Commission-%E2%80%93-CERC.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":124021,"url":"https:\/\/www.scconline.com\/blog\/post\/2017\/04\/11\/change-in-indonesian-law-is-not-a-force-majeure-event-power-generating-companies-not-entitled-to-compensatory-tariff\/","url_meta":{"origin":354541,"position":1},"title":"Change in Indonesian Law is not a force majeure event; Power Generating Companies not entitled to compensatory tariff","author":"Prachi Bhardwaj","date":"April 11, 2017","format":false,"excerpt":"Supreme Court: \u00a0In the issue involving the Power Purchase Agreement (PPA) entered into by the Government and the Adani Enterprises, where the Power Generating Company\u00a0had pleaded that the rise in price of coal consequent to change in Indonesian law would be a force majeure event which would entitle the respondents\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2015\/11\/DSC_5487.jpg?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":161564,"url":"https:\/\/www.scconline.com\/blog\/post\/2017\/10\/05\/state-commission-cannot-re-determine-tariff-of-companies-if-already-determined-by-central-commission-under-s-79-of-electricity-act\/","url_meta":{"origin":354541,"position":2},"title":"State Commission cannot re-determine tariff of companies if already determined by Central Commission under S. 79 of Electricity Act","author":"Saba","date":"October 5, 2017","format":false,"excerpt":"Appellate Tribunal for Electricity: While deciding an appeal, a two-Member Bench comprising of Ranjana P. Desai, J. (Chairperson) and I. J. Kapoor, Technical Member, inter alia held that the State Commission overstepped its jurisdiction while limiting the liability of PSPCL towards the appellant and exceeded the scope of the order\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/Electricity1.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/Electricity1.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/Electricity1.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/Electricity1.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/08\/Electricity1.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":45411,"url":"https:\/\/www.scconline.com\/blog\/post\/2016\/04\/30\/central-electricity-regulatory-commission-indian-electricity-grid-code-fourth-amendment-regulations-2016\/","url_meta":{"origin":354541,"position":3},"title":"Central Electricity Regulatory Commission (Indian Electricity Grid Code) (Fourth Amendment) Regulations, 2016","author":"Sucheta","date":"April 30, 2016","format":false,"excerpt":"The Central Electricity Regulatory Commission in exercise of the power conferred under clause (h) of subsection (1) of Section 79 read with clause (g) of sub-section (2) of Section 178 of the Electricity Act, 2003 makes the Central Electricity Regulatory Commission (Indian Electricity Grid Code) (Fourth Amendment) Regulations, 2016 to\u2026","rel":"","context":"In &quot;Legislation Updates&quot;","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/04\/Central-Regulatory-Electricity-Commission.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/04\/Central-Regulatory-Electricity-Commission.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/04\/Central-Regulatory-Electricity-Commission.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/04\/Central-Regulatory-Electricity-Commission.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/04\/Central-Regulatory-Electricity-Commission.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":290463,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/04\/24\/power-distribution-companies-have-to-pay-change-in-law-compensation-for-all-additional-charges-levied-by-state-instrumentalities-to-power-generators-legal-research-legal-news-updat\/","url_meta":{"origin":354541,"position":4},"title":"Supreme Court explains what qualifies as \u2018Change in Law\u2019; directs DISCOMS to compensate Power Generators for all additional charges levied by State instrumentalities","author":"Apoorva","date":"April 24, 2023","format":false,"excerpt":"Supreme Court has requested the Union of India along with Ministry of Power to evolve a mechanism so as to ensure timely payment by the DISCOMS to the Generating Companies, which would avoid huge carrying cost to be passed over to the end consumers.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"change in law","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/change-in-law.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/change-in-law.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/change-in-law.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/change-in-law.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":286691,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/03\/10\/explained-why-supreme-court-dismissed-appeal-filed-by-msedcl-and-passed-an-order-in-favour-of-adani-power-legal-news-legal-research-updates-change-in-law\/","url_meta":{"origin":354541,"position":5},"title":"Explained| Why Supreme Court dismissed MSEDCL&#8217;s appeal against compensation to Adani Power and GMR Warora Energy due to \u2018Change in Law\u2019?","author":"Editor","date":"March 10, 2023","format":false,"excerpt":"The Supreme Court upheld the judgement passed by the APTEL after observing that the generating companies were entitled to compensation so as to restore them to the same economic position, if the Change in Law had not occurred.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Adani","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-699.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-699.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-699.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/03\/MicrosoftTeams-image-699.png?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/354541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=354541"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/354541\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/354556"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=354541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=354541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=354541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}