APTEL Rules NP Kunta Solar Lines as ISTS, Backs National Tariff Socialisation

The Appellate Tribunal for Electricity (APTEL) has dismissed an appeal filed by the Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO), upholding the Central Electricity Regulatory Commission’s (CERC) decision that transmission assets developed for evacuating power from Andhra Pradesh’s NP Kunta Solar Park form part of the Inter-State Transmission System (ISTS).

The judgment affirms that the associated transmission tariffs are subject to nationwide cost-sharing under the Point of Connection (PoC) mechanism. TANGEDCO had contested CERC’s order dated June 30, 2016, which approved the inclusion of the NP Kunta evacuation infrastructure, including a loop-in loop-out (LILO) of the Kadapa-Kolar line and a substation, into the ISTS framework, despite the fact that most of the power generated from the solar park was to be consumed within Andhra Pradesh.

TANGEDCO argued that the transmission system in question functioned effectively as a dedicated transmission line serving intra-state needs, and therefore did not qualify as ISTS. Citing Section 2(16) of the Electricity Act, 2003, the appellant maintained that 90 percent of the power from NP Kunta was consumed within Andhra Pradesh, and that accordingly, tariff costs should not be socialized across states like Tamil Nadu. The appellant also invoked guidelines issued by the Ministry of New and Renewable Energy (MNRE) in 2014 and 2016, which proposed alternative funding mechanisms for renewable energy evacuation infrastructure, such as grants through the National Clean Energy Fund (NCEF) or the Green Corridor scheme.

Countering these claims, the Central Transmission Utility of India Ltd. (CTUIL) and Power Grid Corporation of India Ltd. (PGCIL), listed among the respondents, asserted that transmission systems developed, owned, or operated by the CTU automatically fall under the definition of ISTS under Section 2(36)(iii) of the Electricity Act. They also pointed out that only generating companies or captive generating plants can construct "dedicated transmission lines," and CTUs such as PGCIL are legally precluded from doing so. Hence, the assets developed by PGCIL could not be classified as dedicated lines.

The Tribunal agreed with the respondents, holding that the statutory language of the Electricity Act clearly supports the classification of the NP Kunta assets as part of ISTS. The judges stated that Section 2(36)(iii) unambiguously brings all assets “built, owned, operated or controlled by the CTU” within the ISTS category, even if they are geographically situated within a single state or primarily serve consumers in one state. The bench also rejected TANGEDCO’s reliance on the “dedicated transmission line” definition, stating that such lines can only be constructed by generating entities, not central utilities.

In a further blow to TANGEDCO, the Tribunal held that the appellant’s claims were barred by the legal principle of res judicata. The bench observed that TANGEDCO had participated in the earlier regulatory proceedings (CERC Petition No. 29/MP/2015), in which the same assets were approved for inclusion into ISTS, but failed to challenge that order in a timely manner. Consequently, it was procedurally barred from reopening the issue in the current appeal.

On the issue of cost-sharing, the Tribunal upheld the validity of applying the PoC mechanism for tariff recovery. It stated that since the assets were legally classified as ISTS, they naturally fall under the tariff-sharing provisions defined in the CERC Sharing Regulations, 2010. Further, CERC Regulatory Approval Regulations (2010) mandates tariff determination for all transmission systems approved as part of ISTS schemes. The MNRE’s funding guidelines, while relevant from a policy standpoint, were deemed non-binding in the face of explicit statutory provisions.

The judgment also addressed the concern regarding MNRE grants received for the project. It clarified that the CERC had already taken these grants into account during the tariff true-up process, as reflected in the final tariff order passed in earlier petition. This adjustment ensured that any partial government funding received was duly deducted from the capital cost while determining tariff recoveries.

Finally, the Tribunal fully upheld the CERC’s order, dismissed the appeal, and reaffirmed that the transmission assets for NP Kunta Solar Park form part of ISTS, with associated tariffs to be recovered through the national PoC framework.

The ruling has significant implications for India’s renewable energy infrastructure planning. It clarifies that evacuation infrastructure developed by the CTU, even for state-specific solar parks, may be treated as national assets for the purposes of grid operation and cost allocation. The case also serves as a procedural reminder to stakeholders to promptly challenge regulatory approvals if they intend to contest classification or tariff implications.