SC to Examine Adani Power's Appeal in Punjab Electricity Regulatory Commission Case

08 Jan 2025

Adani Power shares are expected to stay in the spotlight on January 7, following the Supreme Court's decision on Monday to review the company’s appeal against the Punjab State Electricity Regulatory Commission’s (PSERC) denial of approval for a 2006 power purchase agreement (PPA) between the former Udupi Power Corporation and a Punjab distribution company (Discom).

A bench headed by Justice PS Narasimha has issued a notice to the Punjab State Electricity Regulatory Commission (PSERC) and the Punjab State Power Corporation Limited (PSPCL) in response to an appeal filed by Adani Power. The appeal challenges the Appellate Tribunal for Electricity's September ruling, which upheld PSERC's decision to deny approval.

Udupi Power Corporation and Punjab State Power Corporation have signed an agreement for the supply of 101.5 MW of electricity, representing 10% of the initially proposed 1,015 MW capacity of a power project in Udupi, Karnataka. Adani Power, the successor company to Udupi Power, now operates the project, which includes a 600 MW imported coal-based power plant in Udupi district. The plant provides electricity to distribution companies in Karnataka, Punjab, and Gujarat.

The Commission has rejected PSPCL's proposal to procure 101.5 MW of power from Udupi under a Power Purchase Agreement (PPA), citing that the necessity for long-term power procurement from the Udupi plant has not been substantiated. The Commission also deemed it economically unviable for PSPCL to purchase power from Udupi at the price set by the Central Commission, especially considering the availability of cheaper alternatives in the market.

Adani Power has told the Supreme Court that the Punjab State Electricity Regulatory Commission (PSERC) had declined to approve a power purchase agreement (PPA) signed 14 years ago, despite its implementation by the parties involved. The company argued that the regulatory body had previously approved the power procurement by Punjab State Power Corporation (PSPCL) from the Udupi power project, effectively deeming the agreement as ratified. Adani Power contended that PSERC's refusal to approve the 2006 PPA, based on data provided by PSPCL in 2020, was unjustified, noting that substantial investments had been made by its generating companies on the strength of PPAs.