In a landmark decision, the Appellate Tribunal for Electricity (APTEL) has mandated the Bangalore Electricity Supply Company (BESCOM) to clear all unpaid invoices to wind power generators, including interest on delayed payments. This directive follows an appeal by the generators challenging a Karnataka Electricity Regulatory Commission (KERC) ruling that denied their request for interest on overdue invoices.
The two-member bench of APTEL, comprising Technical Member Sandesh Kumar Sharma and Judicial Member Virender Bhat, overturned the KERC’s earlier decision. The Tribunal’s order stipulates that BESCOM must pay interest at the State Bank of India (SBI) medium-term lending rate for the period of delay on outstanding invoices.
The dispute originated from BESCOM’s failure to pay energy charges from December 2020 onward, as outlined in the Power Purchase Agreements (PPAs) between BESCOM and the power generators. The Tribunal highlighted that BESCOM’s refusal to make payments violated the PPAs, which mandate that payments should be made promptly, with interest accruing on any delays.
The Tribunal criticized BESCOM for halting payments based on a directive from the Principal Chief Conservator of Forests dated November 27, 2018, without adhering to the dispute resolution procedures specified in clause 6.4 of the PPAs. According to the Tribunal, BESCOM’s actions were inconsistent with the established contractual obligations and were unjustified, particularly given that BESCOM continued to receive and sell the electricity generated by the wind turbines without compensating the generators.
The Tribunal clarified that interest on delayed payments should not be misconstrued as a penalty but rather as a standard commercial practice to compensate for the delay in payments. It emphasized that BESCOM’s continued receipt and use of the electricity further substantiated its liability for overdue payments and interest.
As part of the ruling, APTEL has directed BESCOM to calculate and pay the overdue interest to the power generators within a month and ensure regular payments for future invoices. This decision underscores the Tribunal’s commitment to upholding contractual agreements and ensuring fair compensation in the energy sector.
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