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3. The appellant by its application dated December 28, 1998 sought approval of the Non-conventional Energy Development Corporation of Andhra Pradesh Limited (for short 'NEDCAP') for setting up Biomass based generation plant of 4MW capacity at Kotha Cheruvu Village Srikalahasthi Mandal, Chittoor District. The 'NEDCAP Board Sub-Committee' in its meeting held on Feb., 15, 1999 considered the application of the appellant and accepted its request. Formal sanction to set up the Biomass based power generation plant of 4 MW capacity at Kotha Cheruvu Village was accorded by the NEDCAP on February 18, 1999 in favour of the appellant. Subsequently, the appellant filed a fresh application for approval before the NEDCAP to set up Biomass power plant of 4.7 MW capacity. This request was also accepted by the NEDCAP. Again the appellant applied to the NEDCAP for approval to set up Biomass power plant of 6 MW capacity. The NEDCAP approved this request of the appellant as well and granted the requisite sanction on March 1, 2000. The appellant also sought permission of the APERC under Section 21(4) of the Andhra Pradesh Electricity Reform Act for selling energy to the first respondent, APTRANSCO, the then bulk supplier licensee. The Commission in its regulatory jurisdiction approved the format of Power Purchase Agreement between APTRANSCO and the appellant. Thereupon, on Feb. 18, 2002, the APTRANSCO and the appellant entered into Power Purchase Agreement (for short 'PPA') by which the APTRANSCO agreed to the purchase of delivered energy from 6 MW Biomass plant of the appellant at inter-connection point as per the terms and conditions specified therein. After the Biomass plant of the appellant commenced its operation on Sept. 18, 2002, the energy generated by it was being purchased by the first respondent. Subsequently, the obligations under the PPA were transferred to the second respondent, Southern Power Distribution Co. of Andhra Pradesh w.e.f. June 10, 2005 and since then the energy generated by the plant of the appellant is being purchased by the second respondent.

11. The first respondent by letter dated August 5, 2004, addressed to the Biomass Energy Developers Association, with copies endorsed to the appellant and other generators, who were petitioners before the High Court, requested the generators to withdraw the writ petition. It was stated in the letter that the first respondent had decided to calculate PLF on monthly basis to arrive at the purchasable energy limiting to 100% PLF as it was done earlier w.e.f. December, 2003. As a consequence of the aforesaid communication, the appellant withdrew the writ petition and the same was dismissed by the High Court of Andhra Pradesh as withdrawn.

12. Even after the withdrawal of the writ petition by the appellant and other members of the Biomass Energy Developers Association, the first respondent did not refund the amounts deducted from the monthly bills of the appellant and other members. It, however, by its letter dated August 19, 2004 proposed to the APERC to continue the earlier procedure for purchase of energy by duly taking into consideration the net capacity of the plant and number of hours in a billing month upto 100% PLF for billing with retrospective effect from December, 2003 and to refund all amount recovered from the appellant and other members for the period December, 2003 to May, 2004. In response to the aforesaid letter of the first respondent, the Commission by its letter dated October 6, 2004 required the first respondent to intimate whether the amendment to Clause 1.4 was incorporated in the PPA, as directed in Para 3 of the earlier letter of the Commission dated November 15, 2003.

19. In so far as Issue No 1 is concerned, the Commission held that the PPA is not outside the regulatory jurisdiction of the Commission. The Commission was also of the view that it can issue directions to the parties concerned to modify the PPA, if found necessary.

20. As regards Issue No 2, the commission opined that the obligation of the first respondent to purchase electricity generated by the biomass based generation plants is limited to the capacity indicated in Schedule-1 to the PPA.