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CERC Grants Relief to POWERGRID Subsidiary for Transmission Project Delays

Policy & Regulations

Apr 01, 2025

In a significant ruling, the Central Electricity Regulatory Commission (CERC) has provided relief to POWERGRID Medinipur-Jeerat Transmission Limited (PMJTL), a wholly-owned subsidiary of Power Grid Corporation of India Limited (PGCIL), for delays and cost overruns in the 765 kV Strengthening in Eastern Region (ERSS-XVIII) project. The order, issued on March 28, 2025, addresses Petition No. 372/MP/2023, filed under Sections 63 and 79 of the Electricity Act, 2003, seeking extensions and compensation under Force Majeure and Change in Law provisions of the Transmission Service Agreement (TSA) dated November 17, 2016.

Project Background

PMJTL was tasked with constructing a critical transmission network through a tariff-based competitive bidding process, aimed at bolstering power infrastructure in eastern India. The project, comprising substations and transmission lines, had an original Scheduled Commercial Operation Date (SCOD) of July 28, 2020. However, multiple unforeseen events pushed the completion dates, prompting PMJTL to seek regulatory intervention.

Key Decisions
  1. Extension of SCOD:
    • CERC approved extensions for the project’s three phases due to Force Majeure events beyond PMJTL’s control, including the Covid-19 pandemic, cyclones (Fani, Amphan), local agitations, and court cases.
    • Phase I (Elements 1, 3, 5): Commissioned on February 9, 2021 (197-day delay).
    • Phase II (Elements 2, 4, 7, 9): Commissioned on September 29, 2021 (429-day delay).
    • Phase III (Element 6): Commissioned on August 26, 2022 (760-day delay).
    • The commission noted that neither PMJTL nor most Long-Term Transmission Customers (LTTCs) opted to terminate the TSA, with several LTTCs returning performance guarantees, signaling acceptance of the delays.
  2. Force Majeure Relief:
    • PMJTL cited disruptions like Covid-19 waves, natural disasters, and law-and-order issues. Respondents South Bihar Power Distribution Company Limited and North Bihar Power Distribution Company Limited contested the validity of notices and mitigation efforts.
    • CERC upheld most events as Force Majeure, granting SCOD extensions but no financial compensation, aligning with TSA provisions that limit relief to timeline adjustments.
  3. Change in Law Compensation:
    • PMJTL claimed Rs. 289.21 crore in additional costs due to:
      • Goods and Services Tax (GST) Act, 2017: Rs. 54.26 crore – Approved.
      • Bird Diverters and Night Visual Aids: Rs. 24.82 crore – Partially approved for night aids as a new requirement.
      • WBSETCL Tower Design Change: Rs. 4.86 crore – Rejected, deemed a contractual adjustment.
      • Hooghly River Bridge Truck Ban: Rs. 3.13 crore – Rejected due to lack of a Change in Law notice.
    • Approved costs of Rs. 79.08 crore will increase non-escalable transmission charges by 0.32% per Rs. 10.39 crore, as per TSA Article 12.2.1.
  4. Interest During Construction (IDC):
    • IDC was granted for approved Change in Law costs from expenditure dates to COD at actual interest rates, supported by auditor certificates. Claims for IDC on Force Majeure delays were denied, as TSA offers no monetary relief for such events.
  5. Carrying Cost:
    • PMJTL sought carrying costs from COD (August 26, 2022) to the order date. CERC approved it from the petition filing date (November 9, 2023) to March 28, 2025, at the lowest of actual interest, CERC working capital rate, or TSA surcharge rate, citing delays in filing. This is subject to the Supreme Court’s ruling in Civil Appeal No. 8880/2022.
  6. Other Requests:
    • Requests for filing fees and legal expenses were rejected, as they don’t apply to miscellaneous petitions under Section 63 projects.
    • Concerns over bank guarantee invocation by Respondents 2 and 3 were deemed moot, with assurances of no action during the petition’s pendency.

The ruling provides PMJTL with a revised timeline and partial cost recovery, ensuring financial viability without penalizing uncontrollable delays. The decision underscores CERC’s balanced approach, granting relief within TSA limits while rejecting unsubstantiated claims. PMJTL must now submit supporting documents to LTTCs for revised billing, with carrying cost enforcement pending the Supreme Court’s final verdict.