Order in OP No.

3 of 2024

ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION

4thFloor, Singareni Bhavan, Red Hills, Hyderabad 500004

FRIDAY, THE TWELFTH DAY OF APRIL,

TWO THOUSAND AND TWENTY-FOUR
(12.04.2024)
:Present:
Justice C.V. Nagarjuna Reddy, Chairman
Sri Thakur Rama Singh, Member
Sri P.V.R.Reddy, Member
OP No.3 of 2024

IN THE MATTER OF APPROVAL OF THE TRIPARTITE POWER SALE AGREEMENT

DATED 01.12.2021 BETWEEN SECI, APDISCOMS AND GoAP, FOR PURCHASE OF
7000MW SOLAR POWER WITH AN ANNUAL CEILING QUANTUM OF 17000 MU
FOR 25 YEARS

Between:
1. Southern Power Distribution Company of Andhra Pradesh Limited (APSPDCL);
2. Eastern Power Distribution Company of Andhra Pradesh Limited (APEPDCL);
3. Andhra Pradesh Central Power Distribution Corporation Limited (APCPDCL);
4. Government of Andhra Pradesh (GoAP) ……….Petitioners
and
1. Solar Energy Corporation of India Limited (SECI);
2. Ministry of Power, GoI;
3. Andhra Pradesh Green Energy Corporation Ltd (APGECL) Renamed as
“AP Rural Agriculture Power Supply Company Ltd (APRAPSCOM)” …… Respondents

This Original Petition has come up for final hearing before the Commission on
10.04.2024 in the presence of Sri P.Shiva Rao, learned standing counsel for the
Petitioners, and Ms Anushree Bandham, learned standing counsel for the Respondent
No 1. After hearing the learned counsel for both the parties and on consideration of
the entire material on record, the Commission passed the following:

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 Order in OP No.3 of 2024
ORDER
1. This Petition by APSPDCL, APEPDCL, APCPDCL and GoAP (For short “The
Petitioners”) is filed under section 86 (1) (b) read with section 64(5) of the
Electricity Act, 2003 (For short “the Act”), seeking approval of the Tripartite
Power Sale Agreement (the Tripartite PSA) dated 01.12.2021 and its
Supplemental Power Sale Agreement dated 29.12.2023 executed between Solar
Energy Corporation of India (SECI) and the Petitioners. The averments, in brief,
are that Andhra Pradesh Green Energy Corporation Ltd (APGECL) renamed as AP
Rural Agriculture Power Supply Company (APRAPSCOM) is deemed to include as
a successor or assign of the Petitioners in the agreement; that the SECI, Ministry
of Power-Government of India (MoP-GoI) and the APRAPSCOM are arrayed as
Respondents; that the agreement is executed for the procurement of 7000 MW
Solar Power by the Petitioners from Respondent No. 1 with an annual ceiling limit
of 17000 MU under three tranches i.e., 3000 MW in 2024, 3000 MW in 2025 and
1000 MW in 2026; that the Petitioners are the Buying Entities; that the
Respondent No.1, Solar Energy Corporation of India (SECI), is a nodal agency for
the implementation of the MNRE Scheme for ISTS Connected Solar PV Projects
linked with the setting up of a Solar Manufacturing Plant in India on a “Build
Own Operate” basis (Manufacturing linked Solar Scheme). SECI is the Buyer
under the Tripartite PSA and acts as the Intermediary Procurer under the
Guidelines for Tariff-Based Competitive Bidding Process for Procurement of
Power from Grid-Connected Solar PV Power Projects issued by the Ministry of
Power; that Respondent No.3, AP Rural Agriculture Power Supply Company
Limited, is a public undertaking under the complete control of GoAP, specifically
established upon the directions of Petitioner No. 4, vide Go.Rt.No. 152 dated
03.11.2021, by renaming Andhra Pradesh Green Energy Corporation Ltd-
Respondent No 3 specifically to supply uninterrupted 9-hour daytime power to
the farming community on a sustainable basis under the Tripartite PSA; that at
present, Respondent No.3 does not hold a distribution license. However, once it
becomes operational as a distribution licensee, Respondent No.3 shall act as the
Buying Entity in place of the APDISCOMS and shall be taking over the function
of supply and distribution of power under the Tripartite PSA; that the primary
objective of procurement of solar power under the terms of this Tripartite PSA is
to provide a 9-hour daytime free power to farmers envisaged under the policy of
the Government of Andhra Pradesh vide the G.O.Ms. No.l8 dated 15.06.2020
while also contributing towards the target of realising 500 GW Renewable Energy
fixed by the Government of India. That the power supply under the Tripartite PSA
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 Order in OP No.3 of 2024
is estimated to commence in a phased manner from September 2024; that the
procurement of power under the terms of the Tripartite PSA will not cause any
burden on the consumers and decrease the financial burden on the Government
for 25 years while relieving the DISCOMs from the accumulation of subsidy
burdens. That the aforesaid Tripartite PSA was executed in pursuance of the
APERC’s Order dated 11.11.2021, and that in terms of Article 2.1.2 of PSA, the
Petitioners are seeking the approval of this Commission for PSA.
Some important points mentioned in the Petition are stated briefly here under:
i. SECI entered back-to-back power purchase agreements with solar power
developers Adani Renewables Energy & Azure Power India Ltd to Procure
4667 MW & 2333 MW of solar power respectively for supplying to
APDISCOMS. On 29.12.2023, SECI entered into a supplemental PSA to the
Tripartite PSA dated 01.12.2021 with AP Discoms and the Government of
Andhra Pradesh wherein 2333 MW earlier from Azure was substituted with
Adani Renewable Energy without altering the Tariff and terms of the PSA.
ii. Sri K. Ramakrishna (CPI) filed WP(PIL) no. 237 of 2021 before the Hon'ble
High Court of A.P. against the procurement of 7000 MW Solar power from
SECI and the same is pending.
iii. Hon'ble CERC passed orders dt 02.04.2022 approving the adoption of the
tariff of Rs.2.49 per unit including trading margin which was discovered
under the transparent competitive bidding process as per the guidelines
issued by the MoP, Government of India under section 63 of the Electricity
Act, 2003 in the Petition 286/AT/2021 filed by SECI for approval of PPAs
entered into with Solar Power Developers subject to the outcome of PIL
pending before the Hon’ble High Court of A.P.
iv. Sri Payyavula Keshav (MLA of Uravakonda) has filed WP (PIL)No. 76 of 2022
before the Hon'ble High Court challenging the orders passed by the CERC in
Petition No.286/AT/2021 in approving the adoption of tariff is pending
before the High Court of A.P.
v. APDISCOMs filed the PSA before the CERC for approval vide Petition
no.269/MP/2021. Hon’ble CERC heard the matter and passed orders on
28.06.2022 stating, “the Commission has already adopted the tariff under
the PPAs based on the PSAs and the present petition is redundant at this
stage”.

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 Order in OP No.3 of 2024
2. The Petition was filed on 30.01.2024 and the same was taken on the file of the
Commission on 05.02.2024. After the issue of notice to all parties, the matter
was taken up for hearing on 21.02.2024. During the hearing on 21.02.2024, Sri
P. Shiva Rao, learned Standing Counsel for the Petitioners; and Ms. Anushree
Bandham, learned counsel for Respondent No.1 were present. During the
hearing, the issue of maintainability of the OP has cropped up in the light of the
fact that under the PSA and the supplemental PSA, it is only the Government,
which agreed to bear the cost of power purchase the DISCOMs, though parties to
the PSA, have agreed to distribute and supply the power to the farmers. That
whether Under Section 86(1)(b) of the Electricity Act, 2003 the Commission has
jurisdiction to approve PSA of this nature? Moreover, the relief, which is claimed
in this petition, was claimed before the Central Electricity Regulatory
Commission (CERC) by way of a Petition, viz Petition No.269/MP/2021. That was
disposed of by the CERC by order dated 28.06.2022. That once the CERC has
passed an order in a Petition, in which the relief identical to the one claimed in
this OP has been sought, the Commission raised whether the petitioners can
maintain the present OP for the same relief. Both the counsel were asked to
address these aspects on the next date of hearing ie; on 10.04.2024. The Record
of Proceedings to the above effect was placed on the Commission’s website and
the same was published in the Print media also. No objector/stakeholder entered
appearance in the above matter on 10.04.2024 when the case was posted for
further hearing.
3. On 10.02.2024, the counsel for the Respondent-SECI stated that the CERC has
no jurisdiction under Section 79 to approve PPAs/PSAs and only this
Commission has jurisdiction under Section 86 (1) (b) of the Electricity Act, 2003
to regulate Electricity purchase and procurement process through contracts by
Distribution Licensees. The counsel for the Respondent also stated that the PSA
was entered by the Petitioners in pursuance of the Commission’s order dated
11.11.2021, and therefore, the Commission has jurisdiction under Section
86(1)(b) to approve the terms of said PSA. The Learned Counsel further stated
that though the State Government agreed to bear the Cost of Power Procurement,
the DISCOMS are designated as the buying entities (the Procurers) under the
PSA and hence any agreement entered by the DISCOMs requires this
Commission’s Approval under section 86 (1) (b) of the Electricity Act 2003. The
counsel for the Petitioners also stated that PSA will be void as per Section 21 of
the AP Electricity Reforms Act,1998 if the Commission does not consent to PSA.

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 Order in OP No.3 of 2024
Having given our earnest consideration to the submissions of the Learned
Counsel for the Parties on the maintainability, we are entirely in agreement with
them.
The subject matter of PSA pertains to interstate power supply. As the DISCOMs
of Andhra Pradesh have been designated as Buying Entities, i.e., Procurers, they
approached this Commission for its approval to procure power. On a detailed
examination of the matter, the Commission, vide: its Proceedings dated
11-11-2021 granted approval of the said proposal, subject, however, to the
condition that the Tariff shall be fixed by the appropriate Commission. In
pursuance of the said approval, the petitioners entered into a tripartite PSA with
respondent No.1 as narrated hereinbefore. Petitioners 1 to 3 filed a petition
before the Central Electricity Regulatory Commission (CERC) under Section
79(1)(b) of the Electricity Act, 2003, since the transaction related to a composite
scheme for generation and sale of electricity in more than one State.
As noted in the foregoing paras, by order dated 02-4-2022, the CERC approved
the adoption of tariff at 2.49 per kWh (including a Trading Margin of 7 paise per
kWh). While that petition before the CERC was pending, petitioners 1 to 3 have
filed an application seeking approval of the PSA, which was disposed of by the
CERC by order dated 28-6-2022. By the said order, the CERC agreed with the
submissions of the learned counsel for the parties that the petition became
redundant. The learned counsel for the petitioners as well as respondent No.1
submitted that under the Statutory Scheme of the Electricity Act, while the tariff
in respect of the generation and interstate sale of electricity is required to be
fixed/adopted by the CERC under Section 79(1)(b) of the Act, it is only the State
Electricity Regulatory Commissions, which have competence to approve the
PPA/PSA under Section 86(1)(b) of the Act; and that it is by obvious mistake that
petitioners 1 to 3 have approached the CERC for approval of the PSA.
On a reading of Sections 79 and 86 of the Act, we find ourselves in agreement
with the above submissions of the learned counsel for the parties. While the
Tariff for the interstate supply is required to be adopted by the CERC, it is only
the State Electricity Regulatory Commissions, which are conferred with the
jurisdiction, to approve/regulate the electricity purchase and procurement
process, inter alia, through Agreements for the purchase of power for distribution
and supply within the State. Though the State Government has agreed to bear
the entire cost of power purchase, the responsibility of procuring power supply
for the present is placed on Petitioners 1 to 3, as could be seen from Clause (D) of

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 Order in OP No.3 of 2024
the preliminary part of the PSA. It is mentioned therein that “AP DISCOMs are
presently designated as the Buying Entity to procure power from the Buyer to be
sold by the Buyer on a back-to-back basis of the power under the Request for
Selection (RfS) … …”.
In the light of the above position, the Commission is satisfied that without the
formal approval of the PSA by this Commission, the same is not enforceable.
Hence, the petition has been entertained for disposal on merits.
4. Before discussing the submissions on merits, it is relevant to note that some
objectors requested for a public hearing on this petition. Section 64(2) of The
Electricity Act 2003, envisages the publication of application for determination of
tariff under section 62. Under sub-section 64 (3) the Commission is required to
consider all the objections and suggestions received from the public before
issuing the tariff order. In no other context, the Act has envisaged any public
notice by the Commission while discharging its regulatory functions under the
Act. The Commission has framed Andhra Pradesh Electricity Regulatory
Commission (Business Rules of the Commission ) Regulation 1999. Clause 7(2) of
the said regulation envisages hearings of the matter in three different situations
viz
(i). Where the Act provides for such hearings
(ii). In all matters affecting the rights or interests of the licensee or any other
person or class of persons except where the Commission may provide
reasons to be recorded in writing
(iii) Where the Commission considers it appropriate to do so
As noted above, the Act envisages a public notice only when the tariff is
required to be fixed under Section 62 of the Act. In the present case, the CERC
adopted the Tariff discovered through a transparent bidding process under
section 63 of the Act. The present petition is not concerned with the tariff
fixation, but it is filed only for approval of PSA. Therefore, the first limb of
Sub-clause 2 of Clause 7 of Regulation 2 of 1999 has no application to the
present case. Under the second limb, the Commission shall undertake a
hearing in all matters affecting the interests of the Licensee or any other person
or class of persons. As regards, the Licensees, they are themselves petitioners in
the Petition and they are heard. As for the third party any person or class of
persons, they are referable to consumers who are among the main stakeholders.
Having regard to the nature of PSA and whereunder, the State Government has
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 Order in OP No.3 of 2024
undertaken to pay the entire power purchase cost, interests of any category of
Consumers in any way are not affected.
It is relevant to note in this context that, while granting approval for
procurement of power, the Commission stipulated the following conditions.
i) The State Government shall ensure that the transmission and
distribution network is adequately strengthened to cater to the
injection of the proposed power before the commencement of the power
supply.
ii) The DISCOMs are entitled to claim from the Government of AP,
wheeling and other charges, if any, in supplying the proposed power.
The above conditions would insulate all categories of consumers from the
burden of any cost arising on account of the purchase of power either directly
or indirectly including Backing Down cost, Balancing Cost etc. Therefore, the
second limb of sub-clause 2 also does not get attracted.
As regards the third limb, the Commission felt it not appropriate to hold a
hearing in the light of the above reasons in addition to the fact that the present
proceedings are formal in nature and that the substantive aspects of the PSA
have already been accomplished viz approval of procurement process and
fixation of Tariff. So the present proceedings relate to the consequential action
of lending formal approval to terms of PSA. The two core aspects mentioned
above viz approval for procurement and determination of Tariff having already
been completed, the power purchase process has become irreversible and
therefore, any public hearing is a futile exercise.
In the light of the above, the Commission has heard the Counsel for the
Petitioner and Counsel for Respondent No. 1 and proceeded to decide the
matter.
5. The short point in this petition is whether the PSA shall be approved?
6. The Commission while approving the proposal to procure 7000 MW solar power
in three tranches as proposed by the APDISCOMs and permit them to enter into
tripartite PSA by proceedings dated 11.11.2021, has examined the approved load
forecasts and resource plans for the 4th Control Period and indicative forecasts
and plans for the 5th control period. The year-wise indicative energy deficit for
the State as a whole during the 5th Control Period as recorded in the Resource
Plan for the 4th Control Period vis a vis the Long Term Electricity Demand
Forecasting done by CEA in August 2019 for the State of AP as per the SUR

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 Order in OP No.3 of 2024
Model Baseline for the period 2024 to 2030 and concluded that there will be
energy requirement during the 5th control period commencing from 01.04.2024.
The Commission has also taken note of the contents that the Government has
conceived the proposed plan of procurement mainly to achieve the object of
providing 9 hours of daytime free supply to the farmers without increasing the
financial burden on the State’s DISCOMs for the next 25 years and to relieve the
DISCOMs of accumulation of subsidy burdens. The Commission has also noted
that the State Government will be one of the parties to the tripartite Power Sale
Agreement (PSA) and that it will take care of the payment security mechanism
exclusively. Therefore, the Commission gave its approval after being satisfied that
the proposed purchase of power will not cause any burden on any consumer
category as the purchased power is meant to be supplied to the agriculture
sector, the cost of which will be completely borne by the AP State Government.
Equally, the existing DISCOMs will also be freed from supplying power from their
own resources to the agriculture sector, and eventually, the supply activity will
be taken over by the AP Rural Agriculture Power Supply Company (APRAPSCom).
7. Under the transition arrangement, the PSA was entered by DISCOMS. The
arrangement for the supply of free power by GoAP to the farmers directly is not
yet finalised. The GoAP has agreed to bear the entire cost of free power through
its statement before the Commission at the end of public hearings conducted
regarding the finalisation of Retail Supply Tariffs for FY2024-25. The free power
sales therefore included in the sales of the DISCOMS and accordingly in power
requirement. Further, the inclusion of SECI power in DISCOMS’s power
procurement in the transition period will reduce about 40-50 paise per unit of
the weighted average power purchase cost of NCE and therefore it will be
beneficial to all consumers in the transition process.
8. In addition to the above, the Commission has now examined the total Renewable
Energy (RE) projected to be available with the DISCOMS as per the Commission’s
estimations and the RE requirement as per the MoP Notifications under the
Energy Conservation Act 2001, NTP and APERC Regulation are shown in the
table below.

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 Order in OP No.3 of 2024

(MU)
RE Requirement RE
Total RE RE Requirement as as per MoP Requirement
FY Available per MoP Notification Notification as per
Dated 20.10.2023 Dated APERC
22.07.2022 Regulation
2024-25 21,452 24,229 24,229 16,719
2025-26 29,703 28,585 28,585 19,591
2026-27 35,308 33,267 33,267 23,461
2027-28 36,577 38,408 38,408
2028-29 36,504 43,804 43,804
2029-30 36,504 49,123 49,123
As can be seen from the table above, the projected RE available with Respondent
DISCOMS ( even after the inclusion of 7000 MW of solar power under the present
impugned PSA) falls short of meeting the RCO compliance from FY 2027-28. The
APDISCOMS are obligated to comply with the RCO notified by the Government of
India under the Energy Conservation Act, 2001.
9. The Commission after examination finds that all the terms of PSA conform to
standard formats and they are not either unreasonable or unconscionable
affecting the interests of any stakeholder.
10. In view of the foregoing, the Commission is inclined to approve the Tripartite
Power Sale Agreement dated 01.12.2021 and its Supplemental Power Sale
Agreement dated 29.12.2023 subject to the outcome of the PIL pending before
the Hon’ble High Court of Andhra Pradesh.
11. The OP is accordingly allowed.
Sd/- Sd/- Sd/-
P.V.R Reddy Justice C.V. Nagarjuna Reddy Thakur Rama Singh
Member Chairman Member