APTEL Sets Aside APERC’s Deduction of Variable Charges for Monthly Availability Shortfall: Energy Charges Cannot Be Penalised
The Appellate Tribunal for Electricity (“Appellate Tribunal”) in its judgment dated 03.07.2026, has ruled in favour of Hinduja National Power Corporation Limited (“HNPCL”), setting aside the order dated 30.12.2025 passed by the Andhra Pradesh Electricity Regulatory Commission (“APERC”), to the extent it directed deductions from HNPCL’s variable charges on account of shortfall in monthly plant availability.
By allowing Appeal No. 27 of 2026, the Appellate Tribunal has held that under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024, the APERC Regulations of 2008, and the Power Purchase Agreement (“PPA”) dated 16.07.2024 executed between the parties, only fixed/capacity charges are linked to plant availability, while energy charges are strictly linked to the scheduled energy actually supplied and cannot be reduced or penalised for a shortfall in monthly availability.
1. No Statutory or Contractual Basis for Deducting Variable Charges
APERC by way of the Impugned Order had directed the DISCOMs to apply graded deductions from the Variable Cost – 5paise per unit where the shortfall in actual monthly availability was up to 5% below the normative/target level, 10paise where the shortfall was between 5% and 15%, and 15paise where the shortfall exceeded 15%, with liberty to HNPCL to seek release of the withheld amounts by establishing that the underperformance was attributable to uncontrollable factors.
HNPCL contended that neither the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2024 (adopted by APERC), nor the APERC Regulations, 2008, nor the PPA provide for any reduction in energy charges on account of a shortfall in availability, and that the deductions were consequently without statutory or contractual authority. HNCPL contended that Rs. 12.26 Crore had already been withheld from HNPCL’s bills for the months of December 2025 to February 2026.
2. Fixed Charges, Not Energy Charges, are Linked to Availability
Examining Regulation 15 and 16 read with Chapter 11 of the CERC Regulations, 2024, Clause 1.2.2 and 1.2.3 of Schedule-F of the PPA, and Regulations 11 to 13 of the APERC Regulations, 2008, the Appellate Tribunal held that the governing framework, whether under the CERC Regulations, the APERC Regulations, or the PPA executed between the parties expressly and unambiguously stipulates that monthly fixed charges are linked to the Plant Availability Factor for the month vis-à-vis the normative annual plant availability, whereas energy charges are linked solely to the fuel cost/energy charge rate applied to the quantum of energy actually supplied during the month, irrespective of the plant availability achieved in that month.
The Appellate Tribunal held that once the Regulations stipulate the manner of recovery of fixed cost and computation of energy charge, APERC has no jurisdiction to interfere with or modify that scheme by way of adjudication or in a tariff order, any departure can only be effected by way of a formal amendment to the Regulations, and not otherwise.
3. APERC cannot invoke Casus Omissus to fill a regulatory gap that does not exist
APERCS had contended that while the PPA and Regulations focus on annual normative availability, they do not preclude monthly adjustments, and that APERC, as a statutory body, is empowered and obligated to fill contractual and regulatory gaps to ensure reliable supply.
The Appellate Tribunal rejected this submission, holding that both the CERC and APERC Regulations clearly stipulate the methodology for recovery of energy charges for a given month, and once such methodology is prescribed, the Commission is bound to apply it in its entirety. The doctrine of casus omissus was held to have no application, since the Regulations are complete in themselves and leave no vacuum for the Commission to legislate by way of adjudication.
4. Parity with other generators cannot justify an unlawful deduction
APERC had sought to justify the deductions by referring to similar reductions applied to other Intra-State generators such as APGENCO. The Appellate Tribunal held that the application of a similar reduction to other generators is of no relevance, since those orders were not under challenge and the Appellate Tribunal was not bound to extend the same treatment to HNPCL merely because it had been applied elsewhere. The doctrine of “negative equality” or parity cannot be invoked to perpetuate an illegality or justify a deviation from the Regulations, and each appeal must be adjudicated on the basis of the statutory framework and the specific impugned order under consideration.
Accordingly, the Appellate Tribunal set aside the Impugned Order on this issue and directed that recovery of energy charges be enforced strictly in accordance with the applicable CERC Regulations and the PPA, with the Respondents directed to refund the amount deducted/withheld from HNPCL’s energy bills along with applicable carrying cost within four weeks from the date of the judgment.
5. Part load compensation, remanded for quantification only
HNPCL had also claimed Part Load Compensation (“PLC”) in terms of Clause 1.2.5 of Schedule-F of the PPA read with Regulation 6.3B of the CERC [Indian Electricity Grid Code(IEGC)] (Fourth Amendment) Regulations, 2016, on which the Impugned Order contained no discussion, analysis or finding, despite APERC having recorded HNPCL’s claim. The DISCOMs admitted that the Revised Consolidated PPA explicitly provides for part load compensation, but contended that no separate determination was required as PLC for the previous Control Period had been claimed as part of the True-Up process on an actual basis.
Finding no dispute with regard to HNPCL’s entitlement to Part Load Compensation, and noting that the controversy, if any, was confined only to quantification and reconciliation, the Appellate Tribunal held that HNPCL is entitled to Part Load Compensation in terms of the PPA and Regulation 6.3B of the IEGC (Fourth Amendment), 2016, and remanded the matter to APERC for determination and finalisation of the amount payable towards PLC.
The judgment reaffirms that in a statutory tariff regime, the mechanism prescribed under the Regulations and the PPA for recovery of fixed and energy charges must be followed strictly. It further clarifies that the doctrine of casus omissus cannot be invoked to fill a gap where none exists, and that parity with the treatment accorded to unrelated generators cannot be used to sustain an otherwise unlawful deduction.
