Appellate Tribunal For Electricity
Amplus Sun Solutions Pvt. Ltd vs Haryana Electricity Regulatory ... on 13 February, 2026
Judgement in Appeal No. 362 of 2025
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL No. 362 of 2025 & IA No. 1464 of 2025
Dated: 13.02.2026
Present: Hon'ble Mr. Justice Ramesh Ranganathan, Chairperson
Hon'ble Mr. Ajay Talegaonkar, Technical Member
IN THE MATTER OF:
Amplus Sun Solutions Pvt. Ltd.
Through its authorised Signatory
(Senior Manager - Regulatory)
6th Floor, The Palm Square,
Golf Course Extension Road,
Sector - 66, Gurugram - 122 102, Haryana
...Appellant(s)
Vs.
1) Haryana Electricity Regulatory Commission
Through its secretary
Bays 33-36, Sector - 4,
Panchkula, Haryana - 134112
2) Haryana Power Purchase Centre
Through its CMD,
2nd Floor, Shakti Bhawan, Sector - 6,
Panchkula - 134 109, Haryana.
3) Haryana Renewable Energy Development Agency
Through its chairman
Akshay Urja Bhawan, Sector - 17,
Panchkula, Haryana - 134 109
...Respondent(s)
Counsel for the Appellant(s) : Mr. Amit Kapur
Mr. Anupam Varma
Mr. Adamya Ojha
Mr. Rahul Kinra
Mr. Aditya Ajay
Mr. Yash Srivastava
Mr. Girdhar Gopal Khattar
Page 1 of 37
Judgement in Appeal No. 362 of 2025
Counsel for the Respondent(s) : Mr. Shlok Chandra for R-1
Mr. Shubham Arya
Mr. Rishabh Saxena
Ms. Pallavi Saigal
Ms. Kaavya Madan
Ms. Poorva Saigal
Ms. Reeha Singh
Mr. Shree Dwivedi for R-2
INDEX
CONTENTS PAGE NO.
Description of the Parties 3
Factual Matrix of the Case 4
Submissions of the Appellant 8
Submissions of the Respondent No. 2 (HPPC) 14
Issues for Consideration 22
Analysis and Conclusion 22
Issue No. 1: Benchmarking the CUF of the Appellant's 22
Project with that of another developer namely LR
Energy
Conclusion 27
Issue No. 2: Exclusion of Transmission Infrastructure 27
Cost from Project Capital Cost by HERC
Conclusion 33
Issue No. 3: Project Management Expenses 34
Conclusion 35
Issue No. 4: The pro-tem tariff sought by the 35
Appellant
Order 36
Page 2 of 37
Judgement in Appeal No. 362 of 2025
JUDGEMENT
PER HON'BLE MR. AJAY TALEGAONKAR, TECHNICAL MEMBER
1. The present Appeal has been filed by M/s. Amplus Sun Solutions Pvt. Ltd. ("Amplus" or "Appellant") challenging the Impugned Order dated 12.08.2025 in Petition No. 69 of 2024 passed by Haryana Electricity Regulatory Commission (in short "HERC" or "Respondent No. 1").
Description of the Parties
2. The Appellant is a Generating Company and has established a 50 MW solar power project at Village Khanak, Tehsil Tosham, District Bhiwani, Haryana. Supply from the Project to the procurers commenced on 12.01.2021.
3. Respondent No. 1 is the State Electricity Regulatory Commission for the state of Haryana ("HERC").
4. Respondent No. 2 i.e., HPPC is a joint forum created and owned by the State Distribution Licensees ("Discoms") viz., Uttar Haryana Bijli Vitran Nigam Ltd. and Dakshin Haryana Bijli Vitran Nigam Ltd. ("Haryana Discoms") with a mandate to arrange/ procure economical, reliable and cost-effective power from both renewable and non-conventional sources for the Haryana Discoms to meet the universal service obligations of providing electricity to their consumers.
5. Respondent No. 3 i.e., Haryana Renewable Energy Development Agency ("HAREDA") is responsible for the formulation and implementation of the schemes vis-à-vis the development of non- conventional sources of energy in the State of Haryana.
Page 3 of 37Judgement in Appeal No. 362 of 2025 Factual Matrix of the Case
6. On 24.07.2018, the Haryana Commission notified the HERC (Terms and Conditions for Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2017 (in short "RE Regulations, 2017"). The project was originally designed as an open access project for supply of power to High Tension consumers under captive or third-party sale.
7. The Project was claimed to be ready for commissioning by 30.06.2020. However, commissioning was delayed by about eleven months due to refusal of the transmission licensee, Haryana Vidyut Prasaran Nigam Limited ("HVPNL") to execute the connection agreement.
8. In order to resolve the said issue, the Appellant filed Petition PRO No. 25 of 2020 before HERC on 02.05.2020 seeking directions for execution of the connection agreement. Due to delay in listing of the said Petition, the Appellant approached this Tribunal by filing O.P. No. 3 of 2020 on 29.06.2020, inter alia seeking a direction for listing and adjudication of Petition PRO No. 25 of 2020.
9. By Order dated 17.07.2020 passed in O.P. No. 3 of 2020, this Tribunal recorded the assurance of HERC that the petitions would be taken up on or before 31.07.2020 and adjudicated in accordance with law within four weeks thereafter by reasoned orders.
10. Pursuant thereto, Petition PRO No. 25 of 2020 was listed before HERC on 30.07.2020. By Order dated 24.08.2020, HERC observed that resolution of the long-pending issue through mutual consultations would be a positive development keeping in view the national target of achieving 100 GW of solar power.
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11. In the course of discussions between the Appellant and HPPC, the Appellant, without prejudice to its rights and contentions, consented to sell power from the Project to the Haryana Discoms, subject to determination of project-specific tariff under the applicable regulations and grant of necessary regulatory approvals by HERC.
12. Thereafter, HPPC filed Petition PRO No. 45 of 2020 before HERC on 09.09.2020 seeking approval of the source of procurement and the draft Power Purchase Agreement ("PPA") to be executed with the Appellant for purchase of 50 MW solar power at a tariff to be determined by HERC under Section 62 of the Electricity Act, 2003 and in terms of the applicable HERC Regulations.
13. By order dated 14.09.2020, HERC approved the procurement of power from the Project as well as the draft PPA and directed the Appellant to file a separate petition under Section 62 of the Electricity Act for determination of tariff for the Project.
14. Pursuant thereto, the PPA was executed between the Appellant and HPPC on 28.09.2020. On 13.10.2020, the Appellant filed Petition No. 59 of 2020 before HERC under Section 62 of the Electricity Act read with Regulation 6(1) of the RE Regulations, 2017 seeking determination of project-specific tariff for the Project.
15. By order dated 18.01.2021 passed in Petition No. 59 of 2020, HERC determined a levelised tariff of Rs. 2.48 per kWh as against the tariff of Rs. 3.86 per kWh claimed by the Appellant.
16. In the aforesaid order, the Commission, inter alia:
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a) reduced the claimed capital cost by disallowing module cost and civil works cost amounting to Rs. 44 Crores and Rs. 6.81 Crores respectively relatable to 25 MW DC capacity;
b) considered interest rate on term loan and working capital at 9% instead of 9.91%;
c) disallowed Interest During Construction ("IDC") of Rs. 9.59 Crores holding that no funds were borrowed for the Project;
d) benchmarked O&M expenses based on BHEL's price quotes for a 50 MW solar project of NTPC in Andhra Pradesh; and
e) disallowed project management expenses of Rs. 23.75 Crores
17. Aggrieved thereby, HPPC filed Appeal No. 149 of 2021 before this Tribunal on 08.03.2021 challenging the Order dated 18.01.2021 on issues including capital cost, CUF, annual degradation in CUF and escalation of O&M expenses.
18. The Appellant also filed Appeal No. 326 of 2021 on 15.03.2021 before this Tribunal challenging the disallowances made by HERC in respect of capital cost, interest on term loan and working capital, IDC, O&M expenses and project management expenses.
19. During the pendency of the said Appeals, the Appellant approached its lender, NIIF Infrastructure Finance Limited ("NIIF") to avail term loan facilities in order to reduce equity exposure and cost of capital. On 05.12.2022, NIIF sanctioned a term loan of Rs. 190 Crores, out of which only Rs. 109 Crores was disbursed, citing inadequate cash flow to service debt obligations. NIIF imposed conditions for disbursement of the remaining Rs. 81 Crores, including securing a higher tariff through favorable orders of this Tribunal and achieving a Debt Service Coverage Ratio (DSCR) of 1.20.
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20. On 05.08.2024, the Appellant filed IA No. 1357 of 2024 in Appeal No. 326 of 2021 seeking urgent ad-interim relief, contending that reduction of tariff had resulted in a revenue loss of Rs. 51.71 Crores up to 30.06.2024, severe cash flow constraints affecting O&M obligations and warning from NIIF to cancel the remaining loan facility of Rs. 81 Crores. The Appellant sought stay of the order dated 18.01.2021 and grant of a pro-tem tariff of Rs. 3.03 per kWh.
21. In order to seek emergent disposal, the Appellant restricted its challenge to issues relating to capital cost and did not press issues pertaining to interest on loan, IDC and O&M expenses. The Tribunal heard submissions on capital cost, CUF, degradation in CUF and project management expenses. HPPC also acknowledged that the escalation rate of 5.72% per annum for O&M expenses was in accordance with HERC Regulations.
22. On 25.10.2024, this Tribunal passed Judgment in Appeal Nos. 326 of 2021 filed by Amplus and Appeal No. 149 of 2021 filed by HPPC ("Remand Order"), remanding certain issues to HERC, pursuant to which the matter was taken up for reconsideration by the HERC in Petition No. 69 of 2024.
23. By Order dated 12.08.2025, HERC passed the Impugned Order re- determining the tariff and adjudicating upon three issues:
(i) feasible DC capacity corresponding to approved CUF;
(ii) allowance of annual degradation in CUF; and
(iii) revised capital cost.
24. Aggrieved by the Impugned Order dated 12.08.2025, the Appellant has preferred the present Appeal.
25. As recorded in the daily order dated 20th January 2026, Learned Counsel, on both sides, stated that, since the submissions they have made at the interlocutory Page 7 of 37 Judgement in Appeal No. 362 of 2025 stage is the same as in the main appeal, this Tribunal may, if it considers it so appropriate, dispose of the main appeal itself. In view of the said submissions, we proceed to consider and dispose of the main appeal.
Submissions of the Appellant
26. The Appellant submits that the scope of the remand was limited and clearly required HERC to:
a) re-determine the project-specific tariff of the project; and
b) consider the additional DC module capacity installed by the Appellant for achieving CUF of 25.91%, which is achievable only with 75 MW DC capacity corresponding to 50 MW AC capacity, i.e., a DC:AC ratio of 1.5:1, subject to a prudence check.
27. However, by the Order dated 12.08.2025 passed on remand ("Impugned Order"), HERC, while re-determining the tariff, allowed capital cost only for 70 MW DC modules (DC:AC ratio of 1.4:1) instead of the actual 75 MW DC modules installed by the Appellant. On this basis, HERC determined a tariff of Rs. 2.58 per kWh, as against' revised claim of Rs. 3.06 per kWh, despite the actual capital cost being Rs. 244 Crores (i.e., total actual capital cost of Rs. 261 Crores minus Rs. 17 Crores towards IDC in terms of the Remand Order).
28. The Appellant submits that the Impugned Order has disallowed legitimate project costs, including:
a) capital cost of Rs. 13.13 Crores pertaining to 5 MW DC modules, comprising Rs. 8.80 Crores towards module cost, Rs. 1.03 Crores towards proportionate civil works, and Rs. 3.30 Crores towards PV plant supply; and Page 8 of 37 Judgement in Appeal No. 362 of 2025
b) transmission and evacuation infrastructure costs amounting to Rs.
11.29 Crores, in clear violation of Regulation 11 of the HERC (Terms and Conditions for Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation, and Renewable Energy Certificate) Regulations, 2017 ("RE Regulations 2017").
29. It further submits that owing to the wrongful disallowance of the aforesaid capital costs, the Project Management Expenses, which are admissible at the rate of 2% of the approved capital cost, have also been incorrectly reduced.
30. The Appellant submits that HERC has acted arbitrarily and contrary to the remand directions by relying upon the DC CUF of an entirely unrelated project of LR Energy Pvt. Ltd. ("LR Energy"), as approved by HERC in Petition No. 22 of 2025, wherein a DC CUF of 18.45% was considered. On the basis of such unrelated data, HERC computed a hypothetical DC:AC ratio of 1.4:1 for the Appellant's project (25.91% / 18.45%), instead of recognizing the actual and technically required DC:AC ratio of 1.5:1 (25.91% / 17.3%) adopted by it. This methodology was used to wrongfully disallow 5 MW of DC module capacity. The Appellant submits that while HERC proceeded on the assumption of a high AC CUF of 25.91% with a DC:AC ratio of 1.4:1 such AC CUF is in fact achievable only with a higher DC:AC ratio of 1.5:1, as actually installed by the Appellant.
31. It further submits that such benchmarking with LR Energy violates settled principles of law. Firstly, the principles of natural justice have been breached, as Appellant was neither put to notice nor afforded any opportunity to respond to the adoption of benchmarking with LR Energy. In this regard, Appellant had, by its written submissions dated 12.06.2025, specifically opposed the comparison sought to be drawn by HPPC with LR Energy, Greenyana Solar and the Sandhar PPA, contending that such an approach was contrary to the scope of the remand Page 9 of 37 Judgement in Appeal No. 362 of 2025 and impermissible in a project-specific tariff determination under the RE Regulations, 2017.
32. The Appellant also points out that the orders of HERC sought to be relied upon by Respondent No. 2 had already been set aside by this Tribunal. Despite this, HERC neither recorded a decision that it would adopt benchmarking with other projects nor gave any notice to the Appellant of a departure from a project- specific, cost-plus tariff determination to a benchmark-based approach. The Appellant submits that such benchmarking of its CUF with that of LR Energy is arbitrary and erroneous.
33. The Appellant submits that Section 62 of the Electricity Act, 2003 read with Regulations 6(1)(h), 7(2), 11 and 47 of the RE Regulations, 2017 mandates determination of a prudent, project-specific tariff on a cost-plus basis. This Tribunal, in paragraph 29 of the Remand Order, has categorically observed that project-specific tariff determination is fundamentally distinct from benchmark- based normative tariff fixation.
34. Reliance is also placed on paragraph 15 of the judgment of this Tribunal in Greenyana Solar vs. HERC, 2025 SCC OnLine APTEL 17, wherein it has been held that project-specific tariff determination under Section 62 is intended to arrive at a tariff uniquely tailored to the economic and operational realities of a particular project, reflecting actual costs incurred, subject to prudence checks.
35. The Appellant submits that even while relying upon the CUF claimed by LR Energy, HERC failed to undertake any prudence check to verify the accuracy or veracity of such claims. The HERC ignored the material fact that Appellant's CUF projections were more accurate than those of LR Energy. At a DC:AC ratio of 1:1, Appellant's actual CUF deviated by only about 4% from its claimed CUF, whereas LR Energy's actual CUF deviated by approximately 15% from its claim.
Page 10 of 37Judgement in Appeal No. 362 of 2025
36. Despite LR Energy claiming a 6.23% higher CUF than the Appellant, HERC approved a 19.53% higher capital cost for LR Energy, resulting in a higher tariff of RS. 2.94 per kWh for LR Energy as against Rs. 2.58 per kWh for the Appellant. According to the Appellant, this approach violates Section 61(e) of the Electricity Act, 2003 which mandates promotion of efficiency, since a 19.53% increase in capital expenditure ought to have translated into an increase in CUF which was not the case. The outcome has been a tariff that is about 12.5% higher for a less efficient project.
37. Further, the Appellant submits that the Impugned Order is also in clear violation of Regulation 11 of the RE Regulations, 2017 as interpreted by the Hon'ble Supreme Court in PTC India Ltd. vs. CERC & Ors., (2010) 4 SCC 603, which recognizes that capital cost includes the cost of evacuation infrastructure. By disallowing the cost of transmission and evacuation infrastructure, HERC has acted beyond the scope of the remand, particularly when no such disallowance was made in the original tariff determination Order dated 18.01.2021.
38. The Appellant submits that Articles 6.1.3, 6.1.4 and 7.1 of the PPA contemplate that it is required to bear the entire cost and risk associated with, inter alia, the construction, operation and maintenance of the evacuation system, including the cost of bays, metering and protection systems, as well as all risks and expenses relating to construction, operation and maintenance of the Project infrastructure. It is submitted that such expenditure necessarily forms part of the capital cost of the Project and is liable to be passed through in tariff determination.
39. According to the Appellant, if the interpretation placed by HERC on Articles 6.1.3 and 6.1.4 were to be accepted, it would lead to an absurd result whereby no expenditure incurred by a developer would qualify for inclusion in tariff, thereby Page 11 of 37 Judgement in Appeal No. 362 of 2025 defeating the very scheme of cost-plus tariff determination under Section 62 of the Electricity Act, 2003.
40. The Appellant further submits that the reliance placed by the Respondent No. 2 on the judgment of the Hon'ble Supreme Court in WBERC vs. CESC Ltd., (2002) 8 SCC 715, is wholly misconceived. In paragraph 96 of the said judgment, the Hon'ble Supreme Court held that the Commission is bound to give due weightage to the accounts of the generating company and ought not to differ from the same except for cogent and permissible reasons. In the present case, HERC has recorded no reasons whatsoever in the Impugned Order for disregarding the actually incurred and duly audited costs. This approach, according to the Appellant, is contrary to a consistent line of judgments of this Tribunal which clearly define the narrow limits within which actually incurred costs may be disallowed in a prudence check while determining tariff under Section 62.
41. It submits that consequent upon the re-determined tariff of Rs. 2.58 per kWh approved by HERC, the Appellant adjusted the difference between the pro-tem tariff of Rs. 3.03 per kWh paid by HPPC pursuant to the Remand Order and the revised tariff of Rs. 2.58 per kWh for the period from 25.10.2024 to 30.06.2025, together with carrying cost. Such adjustment was duly intimated to HPPC by the Appellant through its letter dated 29.08.2025.
42. The Appellant submits that the Impugned Order has caused and continues to cause, serious and irreparable prejudice to it. It has resulted in a revenue loss of more than Rs. 14.10 Crores from the Commercial Operation Date (12.01.2021) up to 31.12.2025, translating into a loss of approximately Rs. 23.50 Lakhs per month and Rs. 2.82 Crores per annum.
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43. The inadequate tariff has severely eroded the creditworthiness of the Project, leading to cancellation of the balance term loan facility of Rs. 81 Crores by NIIF on 13.10.2025 due to persistent cash-flow constraints.
44. The Impugned Order compels the Appellant to continue with a high equity and debt exposure of its parent company in the Project, while earning a sub-par return on equity of only about 4.1% per annum over the useful life of the Project. The Project is stated to continue to generate negative returns for the first 11 years of operation.
45. Additionally, the depressed tariff has resulted in acute cash-flow shortages, impairing Appellant's ability to meet Operation and Maintenance expenses during the initial 11 years of the Project, thereby necessitating repeated infusion of additional funds. At the currently approved tariff of Rs. 2.58 per kWh, it would be required to infuse approximately 16 paise per kWh over a period of three years, whereas at a pro-tem tariff of Rs. 2.78 per kWh, the required infusion would reduce substantially to about 1 paise per kWh.
46. The Appellant prays for the following relief through its brief submissions dated 27.01.2026:
a) Set aside the Impugned Order to the extent challenged in the present Appeal;
b) Re-determine project-specific tariff of Amplus' Project considering: -
i. Capital cost of Rs. 13.13 Crs. for - 5 MW DC module capacity (Rs. 8.8 Crs.), proportionate cost of civil works (Rs. 1.03 Crs.) and PV plant supplies (Rs. 3.30 Crs.) towards additional DC module capacity installed by Amplus to achieve CUF of 25.91%, which is only possible with 75 MW DC capacity corresponding to 50 MW AC capacity.Page 13 of 37
Judgement in Appeal No. 362 of 2025 ii. Capital cost of Rs. 11.29 Crs. disallowed by HERC in the Impugned Order towards cost of transmission and evacuation infrastructure.
iii. Project Management Expenses, at the rate of 2% of approved capital cost, will be impacted by change in approved capital cost.
Tariff of the Project would be Rs. 2.85 per kWh considering above capital cost of Rs. 24.42 Crs. (Comprising - Rs. 8.80 Crs.: module & related cost, Rs. 3.30 Crs.: PV plant supply, Rs. 1.03 Crs.: cost of civil works, and Rs. 11.29 Crs.: transmission and evacuation infrastructure cost) in addition to CAPEX of Rs. 200.61 Crs. already allowed by HERC.
c) Allow pro-tem tariff of Rs. 2.78 per kWh till the project-specific tariff is re-determined.
d) Allow Amplus to recover differential between pro-tem tariff and present tariff of Rs. 2.58 per kWh with carrying costs computed at Weighted Average Cost of Capital, from the Project's commissioning date of 12.01.2021.
Submissions of the Respondent No. 2 (HPPC)
47. Respondent No. 2 submits that by the present Appeal, the Appellant has challenged the Impugned Order dated 13.08.2025 passed by the HERC limited to two primary issues, namely,
a) DC capacity of 70 MW allowed instead of 75 MW claimed by Amplus for achieving 25.91% CUF; and
b) disallowance of transmission/ evacuation infrastructure cost from the capital cost.
Page 14 of 37Judgement in Appeal No. 362 of 2025 By the above Impugned Order, HERC has allowed a tariff of Rs. 2.58 per Unit for 50 MW AC (70 MW DC) Solar Plant of Appellant at the capital cost of Rs. 200.61 Crores.
48. The Impugned Order dated 13.08.2025 has been passed pursuant to the remand made by this Tribunal vide Judgment dated 25.10.2024 in Appeal Nos. 326 of 2021 filed by Amplus and Appeal No. 149 of 2021 filed by HPPC.
49. By the above Judgment dated 25.10.2024, this Tribunal had set-aside the Order dated 18.01.2021 passed by HERC in Petition No. 59 of 2020 whereby HERC had allowed a tariff of Rs. 2.48 per Unit for 50 MW AC (50 MW DC) Solar Plant of Amplus.
50. Respondent No. 2 draws attention to the findings of this Tribunal in the Judgment dated 25.10.2024, wherein it was held that although the capital cost of DC overloading may be allowed, such allowance is subject to a detailed prudence check and that the benefit of higher CUF claimed on account of DC overloading cannot be accepted without examining the reasonableness of both the cost and the CUF. The Tribunal specifically observed that HERC had earlier failed to undertake such prudence check and, therefore, remanded the matter for redetermination of tariff after examining the feasible CUF corresponding to the capital cost of AC and DC modules allowed.
51. In view of the above findings of this Tribunal, the scope of the remand was clear and unambiguous whereby HERC was to consider the following:
a) Capital cost of additional DC modules to be allowed sought for by the Appellant subject, however, to the prudence check of the associated capital cost and associated CUF achievable by overloading of DC;
b) Prudence check of the capital cost and CUF to be conducted as HERC had not conducted the same in the Order dated 18.01.2021 Page 15 of 37 Judgement in Appeal No. 362 of 2025
52. In so far as issues raised in the present Appeal, the Respondent No. 2 submits that HERC has passed the Impugned Order strictly in terms of the remand made by this Tribunal. The submissions of the Appellant that HERC ought to have simpliciter allowed the DC overloading of 25 MW instead of 20 MW allowed by HERC or that HERC ought to have considered the actual CUF instead of Declared CUF of 25.91% are, in fact, contrary to the remand made by this Tribunal and would amount to a mechanical approach by HERC. Contrary to the above, this Tribunal stressed on the issue of conducting of prudence check by HERC.
53. The challenge made by the Appellant to the Impugned Order vis-à-vis the remand made by this Tribunal are dealt by the Respondent No. 2 in the specific heads of challenge hereunder:
A. APPROVAL OF DC CAPACITY AT 70 MW AGAINST 75 MW CLAIMED BY AMPLUS
54. Respondent No. 2 submits that, pursuant to the remand directions of this Tribunal, the HERC was not merely required just to approve the capital cost claimed by the Appellant, but was duty-bound to determine the appropriate AC:DC ratio corresponding to the declared CUF of 25.91%, based on which the admissible capital cost could be prudently allowed. The exercise mandated by this Tribunal necessarily involved an assessment of the proportionality between the AC:DC ratio, achievable CUF, and the associated capital expenditure.
55. It submits that in the absence of any statutory guidelines, regulations, rule or authoritative data prescribing a standard AC:DC ratio vis-à-vis CUF, the HERC has Page 16 of 37 Judgement in Appeal No. 362 of 2025 rightly undertaken a comparative prudence analysis by benchmarking the declared and achievable CUF of similarly situated solar generators within the State of Haryana operating with an AC:DC ratio of 1:1. In this regard, HERC has considered the CUF of 18.45% declared by LR Energy, a solar generator located in Bhiwani, Haryana, operating with an AC:DC ratio of 1:1, as the base CUF for determining the additional DC capacity required to achieve the higher declared CUF of 25.91% claimed by the Appellant.
56. Based on the said comparative analysis, and taking into account that Amplus is also situated in Bhiwani, Haryana, HERC has prudently allowed DC capacity of 70 MW against the 75 MW DC capacity sought by Amplus, having found that the additional DC capacity claimed was not commensurate with the CUF declared and was not justified on prudence parameters.
57. Respondent No. 2 further submits that the allegation raised by Amplus that it was unaware of the benchmarking exercise or that HERC failed to put Amplus to notice regarding comparison with other generators is factually incorrect and contrary to the record. Attention is drawn towards Paragraph 40 of Amplus' Written Submissions dated 12.06.2025, wherein the reliance placed by HPPC on LR Energy (Bhiwani) with a CUF of 27.17% as considered by Amplus in its PPA with Sandhar Technologies Limited, as well as the CUF of 19.215% in the case of Greenyana Solar as CUF benchmarking parameters, stands expressly recorded. Further, in Paragraphs 41 and 42 of the said Written Submissions, Amplus itself has made detailed rebuttal submissions seeking to distinguish LR Energy and other generators on facts and efficiency parameters.
58. Plea of natural justice violation is, therefore, erroneous. Amplus was aware of the prudence check to be conducted by HERC and the submissions of HPPC. If Amplus had construed the proceedings on a wrong understanding, the same cannot mean that HERC did not conduct the proceeding in an appropriate manner.
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59. Respondent No. 2 submits that the contention of Amplus that the project of LR Energy is "more efficient" 1 and therefore not comparable is legally untenable and contrary to the statutory framework governing tariff determination. Section 61(d) of the Electricity Act, 2003 mandates that tariff determination must be guided by consumer interest while ensuring reasonable recovery of costs. Comparative benchmarking of similarly placed generators operating in the same geographical region is an intrinsic component of a prudence check. Any inefficiencies arising out of the commercial choices made by a generator cannot be a ground to protect it from regulatory comparison for tariff purposes. Amplus has merely attempted to distinguish its project from LR Energy without placing any substantial basis.
60. Respondent No. 2 further submits that the contention of Amplus that HERC was required to consider the actual CUF achieved is misconceived. While it is not disputed that the present case involves project-specific tariff determination, the same does not absolve the Commission of its statutory obligation to conduct a prudence check or require it to mechanically accept all claims made by Amplus.
61. Such submission is contrary to the findings and directions of this Tribunal in its Judgment dated 25.10.2024 and is founded on an erroneous and selective reading of Paragraph 29 thereof. The tariff has been determined for a period of 25 years based on the declared CUF of 25.91% furnished by Amplus, which is not in dispute, and the capital cost as on the Commercial Operation Date ("COD"). The Judgment dated 25.10.2024 neither disturbed nor intended to disturb this fundamental basis of tariff determination. The redetermination pursuant to remand necessarily relates back to the capital cost as on COD and the declared CUF, in accordance with the well-settled doctrine of relation back.
1 In our understanding, the Appellant has actually claimed that its project is more efficient, and yet has been allowed a lower tariff, as may be seen from contention of the Appellant recorded in paragraph 36.
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62. The Respondent No. 2 submits that the acceptance of Amplus' contention would lead to a situation where Amplus would be rewarded for its inability to achieve the declared CUF of 25.91%. The data placed on record by Amplus itself demonstrates that it was unable to achieve the declared CUF even with the claimed DC capacity of 75 MW, which clearly indicates inefficiency and sub- standard performance of the DC modules deployed by Amplus.
63. Without prejudice to the contentions raised by Respondent No. 2 in Review Petition No. 7 of 2025 regarding the lower benchmarking with LR Energy instead of Greenyana Solar, the Respondent No 2 submits that, for the purposes of the present Appeal, HERC has correctly undertaken the prudence check directed by this Tribunal. If the contention of Amplus seeking mechanical acceptance of its claims were to be accepted, the very concept of prudence check, as directed by this Tribunal, would be rendered otiose.
64. In view of the above, Respondent No. 2 submits that the prudence check conducted by HERC is sensible, careful and reasonable. The Impugned Order being reasoned and reflecting a plausible view, does not warrant interference by this Tribunal.
B. TRANSMISSION INFRASTRUCTURE COST (₹ 11.29 Cr)
65. Respondent No. 2 submits that the disallowance of transmission and evacuation infrastructure cost by HERC flows directly from the express terms of the Power Purchase Agreement. Clauses 6.1.3, 6.1.4 and 7.1 of the PPA unequivocally place the entire responsibility of establishing and bearing the cost of transmission and evacuation infrastructure upon Amplus. The remand directions of this Tribunal specifically required HERC to conduct a prudence check of the capital cost under Section 62 of the Electricity Act, 2003. Since evacuation and transmission infrastructure costs form an integral part of the capital cost claimed Page 19 of 37 Judgement in Appeal No. 362 of 2025 by Amplus, examination and disallowance thereof squarely fall within the scope and jurisdiction of the remand.
66. It further submits that the approach adopted by HERC is consistent with its own earlier regulatory determination in the case of Greenyana Solar, Order dated 29.01.2024 passed in Petition No. 33 of 2023, wherein similar transmission and evacuation costs were disallowed. Such disallowance is in consonance with the settled principle that only those costs which are permissible and justifiable may be allowed to be passed through tariff in order to safeguard consumer interest.
67. Respondent No. 2 submits that the allegation of Amplus that the earlier Order dated 18.01.2021 had "attained finality" is misconceived and contrary to the remand directions issued by this Tribunal. This Tribunal, while accepting the submissions of HPPC, had also remanded Appeal No. 149 of 2021 filed by HPPC, having observed that HERC had failed to conduct a prudence check of the capital cost. Consequently, HERC was duty-bound to re-examine all components of capital cost, including impermissible pass-through of transmission infrastructure expenses. The impugned disallowance is thus fully aligned with the remand and consistent with the approach adopted by HERC in the Greenyana Solar case.
68. Respondent No. 2 further submits that the reliance placed by Amplus on the opening portion of Regulation 11 of the RE Regulations, 2017 is baseless and selective. While Amplus correctly states that the present case involves project- specific tariff determination, it ignores the proviso to Regulation 11, which mandates that in cases of project-specific tariff determination, the generating company must submit a detailed break-up of capital cost items along with the petition. In view of the above, and having regard to the specific contractual terms of the PPA, Respondent No. 2 submits that HERC has rightly disallowed the capital cost claimed by Amplus towards transmission and evacuation infrastructure.
Page 20 of 37Judgement in Appeal No. 362 of 2025
69. Respondent No. 2 further submits that in respect of both issues raised by Amplus, it is settled law that tariff determination is a regulatory exercise and that a prudence check is mandatory to ensure that only prudently incurred costs are passed through tariff while balancing consumer interest with commercial viability. Reliance is placed on the Judgment of the Hon'ble Supreme Court in West Bengal Electricity Regulatory Commission vs. CESC Ltd., (2002) 8 SCC 715.
MISCELLANEOUS
70. Respondent No. 2 submits that it has already filed Review Petition No. 07 of 2026 seeking review of the Impugned Order challenged in the present Appeal on the issues of allowance of higher capital cost, adoption of a lower base CUF, Project Management Expenses etc. In the said Review Petition, HPPC has specifically brought to the notice of the Commission serious discrepancies and inconsistencies in the capital cost claims made by Amplus across proceedings. It is, therefore, submitted that the submissions made by Respondent No. 2 in the present Note are without prejudice to the contentions raised in Review Petition No. 07 of 2026.
71. Respondent No. 2 further submits that the plea of Amplus suffering on account of lower tariff is extraneous and incorrect. The alleged distress of Amplus flows from its own contingent financing decisions.
72. Finally, the Respondent No, 2 submits that the present Appeal filed by Amplus be dismissed. Without prejudice, no pro-tem tariff or otherwise be granted to Amplus over and above the tariff of Rs. 2.58 per unit allowed by HERC, specially from the date of COD as contended by Amplus.
Page 21 of 37Judgement in Appeal No. 362 of 2025 Issues for Consideration
73. Based on the submissions made by the Appellant, we find that following issues need our consideration:
(i) Issue No. 1: Benchmarking the CUF of the Appellant's Project with that of another developer namely LR Energy
(ii) Issue No. 2: Exclusion of Transmission Infrastructure Cost from the Project Capital Cost by the HERC
(iii) Issue No. 3: Project Management Expenses
(iv) Issue No. 4: The pro-tem tariff sought by the Appellant Analysis and Conclusion Issue No. 1: Benchmarking the CUF of the Appellant's Project with that of another developer namely LR Energy
74. We note that the Appellant has raised following objections to the benchmarking of CUF of its project with that of LR Energy and consequent determination of capital cost. The summary of Appellant's contention is:
(i) For arriving DC:AC ratio, the HERC has benchmarked its CUF with that of an unrelated project,
(ii) Such benchmarking has violated principle of natural justice as HERC had not put the Appellant on notice, and
(iii) Such benchmarking is against the notion of project specific tariff
75. On the other hand, the Respondent No. 2 has supported the findings in the Impugned order. The summary of contention of Respondent No. 2 is as under:
(i) The HERC has rightly compared the Appellant's project with the best performing project in the same district, Page 22 of 37 Judgement in Appeal No. 362 of 2025
(ii) The Appellant was aware that such comparison was being made by HPPC in its submission before HERC, and had argued against such comparison in its submission before HERC, and
(iii) Though, the present case involves project-specific tariff determination, the same does not absolve the Commission of its statutory obligation to conduct a prudence check
76. We note that the operative part of the Impugned order is as under:
"Thus, in absence of the guiding regulation with regard to AC:DC ratio, and in order to make prudence check on the required AC:DC ratio for achieving the specific CUF, in line with the observations of Hon'ble APTEL, the Commission has considered it appropriate to examine the CUF as well as AC:DC proposed by the petitioners in all the three remand back matters under consideration before it viz. the present case (remand back order dated 25.10.2024), L.R's case (remand back order dated 21.02.2025) and Greenyana's case (remand back order dated 23.04.2025). The comparative table of AC:DC ratio and CUF claimed in all these three cases is given as under:-
The above table shows that M/s. L.R. Energy situated in District Bhiwani has claimed best CUF of 18.45% with AC:DC ratio as 1:1. Accordingly, the Commission has considered it appropriate to consider the same as the base, for the purpose of deciding the DC capacity required to achieve the claimed CUF of 25.91%. Thus, the AC:DC ratio corresponding to the claimed CUF of 25.91% with base CUF of 18.45% (AC:DC as 1:1) is coming at 1.40.
In view of the above discussion, the Commission decides that the DC capacity corresponding to the approved CUF of 25.91%, for 50 MW AC power plant of the petitioner, in the ratio of 1.40:1 is approved at 70 MW, as against the claimed DC capacity of 75 MW."
(emphasis in the original) Page 23 of 37 Judgement in Appeal No. 362 of 2025
77. It may be seen that HERC has tabulated the details of the three projects for which matter was remanded and has compared the Appellant's Project with that of LR Energy because both are in the Bhiwani District. Though the word "benchmarking" has not been used by HERC, but the methodology adopted by HERC effectively translates to benchmarking of one project against only one other project in the same district. The terms benchmark and benchmarking have been used in regulations in India, but perhaps they have not been expressly defined. However, to appreciate the meaning of benchmarking in a regulatory context, one representative definition2 is set out below:
"Cost benchmarking, as it is used in public utility regulation, refers to the use of various statistical and non-statistical techniques to estimate the efficient cost function of a regulated firm based on the out-turn performance data of other comparator firms."
78. The definition though in the context of cost, indicates that benchmarking entails estimating an efficient benchmark based on the observed performance of a set of comparable entities, using suitable analytical techniques. Consequently, the benchmark reflects best-practice performance within the comparator group and is not determined by the performance of any single entity. Fixing technical parameters for a project by comparing with just one project may not be correct because a single project is not representative of the wider set of comparable projects. Regulatory benchmarking and performance measurement require a systematic comparison across multiple peers, so that normal variation and best- practice performance can be captured and outliers are avoided. Relying on one data point risks arbitrary parameters that do not reflect industry norm. Further, we agree with the Appellant to the extent that the CUF of LR Energy with DC:AC ratio of 1 applied by HERC for Appellant's project is based merely on its claim and 2 Biggar, D. The role of cost benchmarking in public utility regulation. J Regul Econ 68, 231-263 (2025). https://doi.org/10.1007/s11149-025-09493-w Page 24 of 37 Judgement in Appeal No. 362 of 2025 therefore may not necessarily reflect the expected performance under standard operating conditions.
79. On the violation of principle of natural justice as contended by the Appellant, we note from para 3.27 of the Impugned Order that in the remand proceeding, the Respondent No. 2 had requested HERC to compare the Appellant-Petitioner's project with that of LR Energy. The Appellant-Petitioner had duly addressed the same in the rejoinder in the remand proceedings. The principles of natural justice stand satisfied once an opportunity of hearing is afforded. The mere fact that the Commission has accepted the Respondent's submission does not, by itself, constitute a violation of natural justice. Natural justice ensures a fair opportunity to present one's case and does not extend to a requirement that the Commission disclose its tentative conclusions. The Commission has relied only on material available on record and, accordingly, we do not agree with the plea of Appellant- Petitioner regarding violation of natural justice.
80. The Appellant has relied on this Tribunal's Judgement in Greenyana Solar vs. HERC, 2025 SCC OnLine APTEL 17 wherein it has been held that project- specific tariff determination under Section 62 is intended to arrive at a tariff uniquely tailored to the economic and operational realities of a particular project, reflecting actual costs incurred, subject to prudence checks. The relevant part of the aforesaid Judgement is reproduced below:
"15. In our considered view, the project-specific tariff determination under Section 62 of the Electricity Act is to arrive at a tariff that is uniquely tailored to the economic and operational realities of a particular project, while being subject to stringent checks for transparency, fairness, and policy consistency; such an approach not only helps secure return on investment but also ensures that tariff levels remain in line with consumer protection goals and broader market efficiency. The project specific tariff reflects actual costs incurred subject to prudence check."Page 25 of 37
Judgement in Appeal No. 362 of 2025
81. There is no need for us to reiterate the above-mentioned view in respect of projects under Section 62 of the Electricity Act, 2003. The determination of project- specific tariff under Section 62 of the Electricity Act, 2003 presents certain inherent challenges to the regulators, particularly in the case of technologies such as solar power. These challenges arise primarily due to the absence of a sufficiently large and reliable database of projects governed by Section 62. This stands in contrast to projects procured under Section 63, where tariffs are discovered through a competitive bidding process and the responsibility of meeting the tender specifications at the lowest quoted tariff rests with the bidders. Be that as it may, the regulator is nevertheless required to adopt a suitable, reasoned and consistent approach for discharging its statutory obligation. Without prejudice to other possible approaches, one such methodology could include the use of a reputed and widely accepted simulation software, appropriately configured with site- specific inputs, to assist in arriving at a reasonable determination. We note the apprehension expressed by Respondent No. 2 on use of a particular simulation tool (PVsys) by the Appellant, on the ground that this tool provides only indicative statistical estimates under different probabilities, and that the simulation results thus achieved are dependent upon various presumptions taken at the choice of the entity preparing such report. However, we are of the view that any technical study is ultimately contingent upon the realism of the input parameters, and therefore, if considered necessary, the HERC may have such a study carried out through an independent expert.
82. We note that the Appellant has referred to certain technical parameters, including inverter loss and configuration loss. Configuration loss, which primarily arises due to clipping when DC generation exceeds inverter capacity (i.e., where the DC:AC ratio exceeds unity), is a recognised technical phenomenon. However, such losses are required to be accounted for on a rational basis. Once appropriate allowance is made for the incremental configuration losses associated with DC oversizing, the DC:AC ratio implicit in the guaranteed CUF would be marginally Page 26 of 37 Judgement in Appeal No. 362 of 2025 higher than the ratio obtained through a simple division of the guaranteed CUF by the CUF corresponding to a DC:AC ratio of 1.
Conclusion
83. In view of the foregoing analysis, we are of the opinion that fixing parameter for the Appellant's projects by comparing it with the claimed value for just one project of another developer does not meet the requirement of project specific tariff under Section 62 of the Electricity Act, 2003. We make it clear that we have not expressed any opinion as to whether or not the value of DC:AC ratio and the cost derived on the basis of benchmarking with another project is appropriate; and our opinion is solely on the methodology adopted by the HERC. To arrive at appropriate DC:AC ratio, we have decided to remand the matter to HERC with the liberty to adopt an alternate approach, including a simulation study with appropriate parameters, if necessary, through an independent expert.
Issue No. 2: Exclusion of Transmission Infrastructure Cost from Project Capital Cost by HERC
84. The essence of Appellant's submissions on this issue is as under:
(i) The Impugned Order violates Regulation 11 of the RE Regulations, 2017, as interpreted by the Hon'ble Supreme Court in PTC India Ltd. vs. CERC (2010) 4 SCC 603, by wrongly excluding evacuation and transmission infrastructure costs from capital cost, despite no such disallowance in the original tariff order and beyond the scope of remand.
(ii) The PPA expressly requires the developer to bear the entire cost and risk of evacuation and project infrastructure, which necessarily forms part of capital cost and must be passed through in tariff. The Appellant argues that HERC's interpretation would defeat the cost-plus tariff framework under Section 62 of the Electricity Act, 2003.
Page 27 of 37Judgement in Appeal No. 362 of 2025
85. On the other hand, summary of the submissions of the Respondent No. 2 is as under:
(i) The disallowance of transmission and evacuation infrastructure costs flows directly from the express terms of the PPA, which unequivocally place the responsibility and cost of such infrastructure on the Appellant.
(ii) Pursuant to the Tribunal's remand, HERC was required to conduct a prudence check of the entire capital cost under Section 62 of the Electricity Act, 2003, and the examination and disallowance of these costs squarely fell within the scope of remand.
(iii) The approach adopted by HERC is consistent with its earlier determination in Greenyana Solar (Order dated 29.01.2024), and in line with settled principles permitting only justifiable costs to be passed through in tariff to protect consumer interest.
(iv) The earlier tariff order had not attained finality in view of the remand directions, and that Appellant's reliance on Regulation 11 of the RE Regulations, 2017 is selective, as the proviso thereto requires detailed justification of capital cost items, which warranted the impugned disallowance.
86. First and foremost, we would like to analyse, whether or not the issue of inclusion of expenditure on transmission facility was within the scope of remand. The operative part of the Remand Order is reproduced below:
"40. In view of the above deliberations, we set aside the Impugned order to the limited extent and remand the matter in both the appeals (APL 326 of 2021 & APL 149 of 202) to State commission for redetermination of tariff after prudence check of Capital cost including related issues raised and considering the feasible CUF corresponding to the capital cost of AC:
DC module allowed. We make it clear that the issues with regard to Interest on term loan and working capital, Interest During Construction Page 28 of 37 Judgement in Appeal No. 362 of 2025 and O& M expenses shall not be open for reconsideration as admitted by learned counsel of Amplus. In the interregnum, Amplus is allowed a tariff of Rs 3.03/Kwh from the date of their order till the matter is finally decided by the State Commission upon remand, which needs to be decided expeditiously by State Commission. Both the appeals and associated IAs are disposed of in view of the above-mentioned terms."
87. A plain reading of the operative part of Remand Order reveals that the entire issue of prudence check of capital cost including, related issues raised and considering the feasible CUF corresponding to the DC:AC ratio allowed was referred to HERC. Therefore, the contention of the Appellant that HERC has gone beyond the scope of the Remand Order has no merit. However, we observe that a departure has been made in the remand proceedings from the approach adopted in its order dated 18.01.2021, inasmuch as the cost of transmission infrastructure, which was earlier not excluded, has been excluded.
88. It is worthwhile to go through the relevant Articles of the PPA about cost of transmission, as also Regulations 6 (1) (h), 7(2) and 11 of the RE Regulations 2017 which have been relied on by the Appellant to claim that the HERC has erred by omitting cost of evacuation facility from the Capital Cost. All the above- mentioned articles of PPA and Regulations are reproduced below:
89. Relevant Article of the PPA:
"6.1.3 The entire cost of transmission including cost of construction of line, bay, metering and protection system etc up to the Delivery Point shall be borne by the Solar Power Developer.
6.1.4 Construction and operation/ maintenance of evacuation system including transmission line upto the point of connectivity at Page 29 of 37 Judgement in Appeal No. 362 of 2025 Nigam's/Discom's substation shall be the responsibility of Solar Power Developer.
Article - 7: Generation facilities construction & development of the project 7.1 Solar Power Developer's Obligations 7.1.1 The Solar Power Developer undertakes to be responsible, at Solar Power Developer's own cost and risk, for:
b. designing, constructing, erecting, commissioning, completing and testing the Solar Power Project in accordance with the applicable Law, the Grid Code, as per the terms and conditions of this Agreement and Prudent Utility Practices;
d. connecting the Solar Power Project switchyard with the Interconnection Facilities at the Delivery Point and further to the substation of Nigam/Discom;
e. owning the Solar Power Project throughout the Term of the Agreement free and clear of encumbrances, except those expressly permitted under Article 21.3;"
90. Relevant Regulations of RE Regulations, 2017:
"6. Project Specific tariff. -
(1) Project specific tariff, on case to case basis, may also be determined by the Commission for the following types of projects:
...
(h) Solar PV and Solar Thermal Power projects, if a project developer opts for project specific tariff: Provided that the Commission while determining the project specific tariff for Solar PV and Solar Thermal shall be guided by the provisions of these Regulations.Page 30 of 37
Judgement in Appeal No. 362 of 2025
7. Petition and proceedings for determination of tariff. -
...
(2) A petition for determination of project specific tariff shall be accompanied by such fee as may be determined by regulations and shall be accompanied by the following:-
a) Information in forms 1.1, 1.2, 2.1 and 2.2 as the case may be, and as appended to these regulations;
b) Detailed project report outlining technical and operational details, site specific aspects, premise for capital cost and financing plan etc.
c) A statement of all applicable terms and conditions and expected expenditure for the period for which tariff is to be determined.
d) A statement containing full details of calculation of any subsidy and incentive received, due or assumed to be due from the Central Government and/or State Government. This statement shall also include the proposed tariff calculated without consideration of the subsidy and incentive.
e) Any other information that the Commission may require the petitioner to submit.
(3) The proceedings for determination of tariff shall be in accordance with the HERC (Conduct of Business) Regulations 2004, as amended from time to time.
11. Capital Cost. - The norms for the Capital cost as specified in the subsequent technology specific chapters shall be inclusive of all capital work including plant and machinery, initial spares, civil work, erection and commissioning, financing and interest during construction, and evacuation infrastructure up to inter-connection point.
Provided that for project specific tariff determination, the generating company shall submit the break-up of capital cost items along with its petition.
Page 31 of 37Judgement in Appeal No. 362 of 2025 Provided further that in case where land is on lease basis, the cost of land to be taken as part of capital cost shall be determined as per the Land Lease Agreement. This provision shall be applicable for project specific cases."
91. It may be observed that Regulations 6(h) and 7, relied upon by the Appellant, do not specifically address transmission infrastructure. Regulation 11, however, expressly provides that the capital cost shall include, inter alia, evacuation infrastructure up to the inter-connection point. A plain reading of the PPA provisions might suggest that the cost of the transmission system up to the Inter-connection Point is to be borne exclusively by the developer (Appellant). However, this obligation already applies to the entire Project, not merely to transmission system. The critical question is why the PPA singles out transmission for specific mention. In our view, while the developer's responsibility to construct the Solar PV Project, comprising solar modules, inverters, transformers, switchyard and all associated generation infrastructure, is implicit and self-evident, the transmission/ evacuation line from switchyard to Inter-connection Point represents the interface boundary between generation assets and the licensee's network. The PPA provision serves the specific purpose of eliminating any ambiguity regarding responsibility for this discrete component. Regulation 11 merely confirms that such cost forms part of the Project's capital cost for tariff determination. In our opinion, reading harmoniously, the PPA and Regulations lead to a single conclusion i.e. the developer must construct the transmission system up to the Inter-connection Point, with its cost included in the Project capital cost recoverable through tariff. In any event, the construction of transmission system up to Inter-connection Point was to be undertaken by the Appellant-Developer in this case, as the Project was originally envisaged as open access project.
92. The Appellant has relied upon several judicial precedents to emphasise that the provisions of the Regulations prevail over those of the PPA. Conversely, Respondent No. 2 has contended that the Appellant's reliance on these judgments Page 32 of 37 Judgement in Appeal No. 362 of 2025 is misplaced, as the cited cases are not applicable to the facts of the present matter. In our view, it is a settled legal position that the Regulations have an overriding effect over the terms of the PPA [PTC India Ltd. vs. CERC (2010) 4 SCC 603]. Our analysis in the preceding paragraphs reflects that in any case, there appears to be no conflict between Regulations and PPA provisions, when interpreted harmoniously. However, even if one holds opinion that the PPA provisions lead to interpretation that cost of transmission is not to be included in the capital cost, the Regulations will have over riding effect.
93. The Respondent No. 2 has contended that the approach adopted by HERC is consistent with its own earlier regulatory determination in the case of Greenyana Solar, Order dated 29.01.2024 passed in Petition No. 33 of 2023. We note that the HERC in the paragraph 6.1.4 of the Impugned Order has quoted order in the Greenyana solar case and concluded that the disallowance of cost of transmission/ evacuation infrastructure has not been challenged before any court of competent jurisdiction; therefore, has attained finality. However, in our view it cannot be argued that merely because disallowance of transmission cost in case of Greenyana Solar was not challenged and has attained finality, the same disallowance must automatically be applied in the present case too. The principle of res judicata operates only between the same parties (or their privies). A regulatory order attaining finality in one case does not, by itself, create a binding precedent against a different party in a separate proceeding. Res judicata does not apply in rem; it applies in personam [State of Rajasthan vs. Nemi Chand Mahela and Others, (2019) 14 SCC 179].
Conclusion
94. Based on the forgoing analysis, we have come to the conclusion that after prudence check, the HERC should allow tariff on the expenditure incurred by the Appellant-Developer on the transmission system for Page 33 of 37 Judgement in Appeal No. 362 of 2025 evacuation of power up to the Inter-connection Point. Accordingly, we remand this issue also to the HERC.
Issue No. 3: Project Management Expenses
95. The Appellant seems to be seeking an assurance that since these expenses have been allowed in the Impugned Order at the rate of 2% of the approved capital cost, and therefore as a consequence to this Appeal, if its approved capital cost increases, there will be commensurate increase in the Project Management Expenses.
96. Respondent No. 2 has mentioned that it has filed a Review Petition seeking review of the Impugned Order on issues including allowance of higher capital cost, adoption of a lower base CUF and Project Management Expenses. It is stated that the submissions made in the present Appeal are without prejudice to the said Review Petition.
97. We note the pendency of Review Petition No. 07 of 2026 before the HERC. However, this does not affect the adjudication of the present Appeal under Section 111 of the Electricity Act, 2003. We also note that the Impugned Order allows Project Management Expenses at the rate of 2% of the Capital Cost. Appellant has not appealed against such percentage decided by the HERC. The Respondent No. 2 has not raised any specific objection to this percentage in these proceeding but has merely mentioned filling of a review petition inter-alia on this issue.
98. We find that the expectation of the Appellant is reasonable. However, there may be reasons for the HERC to arrive at different percentage of Project management Expenses for transmission part of the Project.
Page 34 of 37Judgement in Appeal No. 362 of 2025 Conclusion
99. In view of the forgoing analysis, we conclude that since the basis for determination of Project Management Expenses has been decided, the same basis will have to be continued after the Capital Cost gets revised in the fresh remand proceedings. However, we give liberty to the HERC to arrive at a different percentage of Project Management Expenses for transmission infrastructure by a reasoned order.
Issue No. 4: The pro-tem tariff sought by the Appellant
100. The Appellant has contended that the lower than the desired tariff approved by the HERC is not even sufficient to meet operation and maintenance expenses and has sought a pro-tem tariff of Rs. 2.78 per kWh till the project-specific tariff is re-determined. The Appellant has also requested for permission to recover differential between pro-tem tariff and present tariff of Rs. 2.58 per kWh with carrying costs computed at Weighted Average Cost of Capital, from the Project's commissioning date of 12.01.2021. The Respondent No. 2 has opposed this request made by the Appellant.
101. It may be seen that we have decided to remand the matter on appropriate DC:AC ratio and resulting capital cost to the HERC. We have also remanded revised amount of the Project Management Expenses. However, at this stage we would like to guess impact of these matters, if any, on the tariff. Therefore, we are not inclined to give additional pro-tem tariff arising from the aforesaid issue. We have also decided to remand the matter regarding expenditure incurred by the Appellant-Developer on evacuation system with additional capital cost to be considered for tariff after prudence check. We are inclined to grant additional pro- tem tariff based on this component. The claim of the Appellant on capital expenditure incurred on transmission system is ₹ 11.29 Cr. We have decided to Page 35 of 37 Judgement in Appeal No. 362 of 2025 provisionally consider 75% of this expenditure i.e. ₹ 8.47 Cr. In the Impugned Order, HERC has worked out tariff of ₹ 2.58 per kWh based on Capital Cost of ₹ 200.61 Cr. The proportionate increase in tariff due to additional capital expenditure of ₹ 8.47 Cr considered for pro-tem tariff would work out to be about ₹ 0.109 per kWh (=2.58 x 8.47/200.61). Since, inclusion of additional capital expenditure would lead to generally slightly less than proportionate increase in tariff we are inclined to allow additional 90% of the aforesaid value i.e ₹ 0.098 per kWh (0.9 x 0.109). Thus, we are allowing a pro-tem tariff of Rs 2.68 per kWh (round off of 2.58+0.098). This pro-tem tariff will be applicable from the date of this order till the matter is finally decided upon remand, which needs to be decided expeditiously by the HERC.
ORDER
(i) For the foregoing reasons as stated above, the Appeal No. 362 of 2025 is allowed to the extent of the following issues being remanded to the HERC, and the Impugned Order is set aside only insofar as it relates to these issues:
(a) Determination of appropriate DC:AC ratio, with the option to carry out a simulation study with appropriate parameters, if necessary, through an independent expert. This appropriate DC:AC ratio shall be used for determination of appropriate capital cost, which in turn shall be used for determination of tariff.
(b) Inclusion of capital cost on transmission infrastructure up to Inter-
connection Point after prudence check. This additional cost shall also be used for determination of tariff.
(ii) The Basis for Project Management Expenses, as determined, shall continue to apply notwithstanding any revision of the Capital Cost pursuant to the fresh remand proceedings. However, we give liberty to the HERC to arrive at a different percentage of Project Management Expenses for transmission infrastructure by a reasoned order.
Page 36 of 37Judgement in Appeal No. 362 of 2025
(iii) A pro-tem tariff of ₹ 2.68 per kWh from the date of this judgement shall be payable till the matter is finally decided upon remand, which needs to be decided expeditiously by the HERC.
(iv) As per settled principle, carrying cost will be payable on the differential amount i.e. difference between the tariff determined consequent to tariff determined by the HERC after conclusion of the remand proceeding consequent to this judgment and the tariff actually paid so far, subject to the adjustments already made so far on this account.
The Captioned Appeal and pending IAs, if any, are disposed of in the above terms.
PRONOUNCED IN THE OPEN COURT ON THIS 13th DAY OF FEBRUARY, 2026.
(Ajay Talegaonkar) (Justice Ramesh Ranganathan)
Technical Member Chairperson
REPORTABLE / NON-REPORTABLE
kns/mkj/mg/kks
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