CERC Rejects CESC’s INR 3.81/kWh Tariff for 300 MW Hybrid Project

The Central Electricity Regulatory Commission (CERC) has rejected a petition filed by CESC Ltd. seeking adoption of a INR 3.81/kWh tariff for a 300 MW wind-solar hybrid power project.

The Commission cited jurisdictional lapses and procedural violations in the competitive bidding process, which it deemed non-compliant with prevailing regulations for interstate power procurement.

The hybrid project was proposed to be set up in Madhya Pradesh, with power to be supplied to West Bengal. However, the deviation approvals required under the bidding guidelines were obtained from the West Bengal state authorities, rather than the Central Government,despite the project's interstate nature. CERC, in its order, ruled that such approvals were 'non-est', or legally invalid, as the state government lacked jurisdiction in the matter. 

This is not the first time the Commission has raised concerns over CESC’s approach. In a similar matter in November 2024, CERC had cautioned the utility about the need to seek deviation approval from the appropriate authority. Despite that, CESC went ahead with a fresh tender on November 8, 2024, repeating the same procedural error. The order also suggests that CESC may have failed to disclose the project’s interstate nature when seeking state-level approval, raising questions about the transparency of the process.

CERC also expressed reservations regarding the discovered tariff of INR 3.81/kWh, noting it was approximately 25 percent higher than tariffs discovered in recent SECI and NTPC wind-solar hybrid bids, which ranged between INR 3.25 and INR 3.46/kWh. While CESC claimed that the higher tariff was justified by a 50 percent projected capacity utilisation factor (CUF), the Commission found this assertion speculative and lacking adequate supporting data.

Besides, concerns were also raised about the level of competition in the bidding process. Only three bidders participated in the tender, and the winning bidder, Purvah Green Power,was identified as a sister concern of CESC. The Commission observed that the structure of the tender may have restricted competition, further undermining the transparency of the process.

As a result, the Commission concluded that the bidding process did not conform with Section 63 of the Electricity Act, which mandates transparent and competitive procurement. Accordingly, CERC rejected the request for tariff adoption and advised that any re-tendering must be preceded by deviation approvals from the Central Government, not the state.

“The appropriate Government for interstate transactions is the Central Government,” the order emphasised, adding, “State approvals obtained through concealment confer no rights.” The Commission also reiterated that 'exceptions cannot become rules,' reinforcing its intent to tighten regulatory compliance for renewable energy procurement.

CESC now has the option to appeal the decision before the Appellate Tribunal for Electricity (APTEL), or to initiate a fresh bidding process in accordance with proper regulatory procedures.

The ruling is expected to have wider implications for discoms and project developers, highlighting the need for strict adherence to jurisdictional and procedural norms in interstate renewable energy projects.