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Apr 11, 2017 03:36 PM IST | Source: CNBC-TV18

SC disallows compensatory tariff to Tata Power and Adani Power

The Supreme Court today set aside the CERC order of allowing compensatory tariff given to Tata Power and Adani Power on the grounds of force majeure.

The Supreme Court today set aside the Central Electricity Regulatory Commission (CERC) order of allowing compensatory tariff to Tata Power and Adani Power on the grounds of force majeure (meaning the circumstances are unforeseeable).

The companies had sought the regulator’s involvement stating they suffered losses due to high cost of imported coal. In April 2013, CERC allowed Tata and Adani Power to hike power tariffs to compensate from a change in Indonesian law which unexpectedly increased coal cost in 2010.

CERC had allowed the compensatory tariff to be computed under the formula provided by it. The order passed by the CERC was subjected to the final proceeding before the Apex Court.

The appeal filed by the state discoms and NGOs have been upheld by the Supreme Court. The Apex Court held that the change in law argument has been allowed to the limited extent of Indian laws and not overseas laws.

The detailed court order is still awaited.

Speaking to CNBC-TV18, Harshvardhan Dole, VP-Instl Equities of IIFL said the SC order is negative for Tata Power and Adani Power. He said that Tata Power is relatively better off compared to Adani Power as Adani has been booking compensatory tariffs in it P&L.

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