APTEL says trader can’t be blamed for generator’s short-supply “gaming”
The Appellate Tribunal for Electricity (APTEL) has partially set aside an order of the Karnataka Electricity Regulatory Commission (KERC) that held Tata Power Trading Company Limited liable for “gaming” and imposed liabilities aggregating more than Rs 4.88 crore arising from the short-supply of power under a 2013 Power Purchase Agreement (PPA).
In its judgment dated July 15, 2026, APTEL upheld only the liquidated damages component of Rs 2.02 crore while setting aside liabilities towards Unscheduled Interchange (UI) Charges, “gaming” penalties and open access charges. The Tribunal also directed that any amount recovered from the company over and above the liquidated damages be refunded within four weeks, along with applicable carrying cost.
The matter has been remanded to KERC for issuance of consequential directions.
Background
The dispute originates from a PPA dated September 6, 2013, under which Tata Power Trading Company Limited was contracted to supply 57 MW of electricity to five electricity supply companies (ESCOMs) in Karnataka.
The power was to be sourced from Shantha Projects Limited. However, following short-supply by the generator, the ESCOMs deducted various amounts from payments due to Tata Power Trading. The company subsequently approached KERC challenging these recoveries.
In its August 1, 2017 order, KERC held Tata Power Trading liable for Rs 2.02 crore in liquidated damages under Article 6.2.4 of the PPA, Rs 1.16 crore in UI Charges, a penalty of Rs 73 lakh for alleged “gaming”, and Rs 95 lakh towards open access charges.
Liquidated damages upheld
APTEL upheld KERC’s interpretation of Article 6.2.4 of the PPA, agreeing that liquidated damages should be calculated based on the difference between 85% of the contracted capacity and the actual energy supplied.
The Tribunal held that the Commission’s interpretation was consistent with the contractual provisions agreed between the parties and found no reason to interfere with this portion of the order.
UI Charges and gaming
The Tribunal, however, found substantial infirmities in the Commission’s treatment of UI Charges and allegations of “gaming.”
APTEL noted that the ESCOMs had expressly abandoned their claim for UI Charges during the proceedings before KERC. Despite this, the Commission proceeded to impose liability on Tata Power Trading.
The Tribunal observed that it was “inexplicable” for KERC to hold the appellant liable for UI Charges after the claim had been given up by the respondents.
On the issue of “gaming”, APTEL held that KERC had exceeded the scope of the dispute. It observed that allegations relating to manipulation of schedules were directed principally at Shantha Projects Limited, which had failed to submit revised schedules, and not Tata Power Trading, which was acting as a trading licensee.
The Tribunal further noted that none of the ESCOMs had filed a counterclaim seeking compensation on account of “gaming.”
Open access charges
APTEL also set aside the levy of Rs 95 lakh towards open access charges. The judgment records that KERC itself had acknowledged at multiple places in its order that the ESCOMs had relinquished their claim for these charges.
Despite this, the Commission proceeded to impose liability on Tata Power Trading. The Tribunal described this as a “blatant error” and held that KERC had travelled beyond the pleadings and reliefs sought by the parties.
APTEL reiterated the settled principle that adjudicatory bodies must confine themselves to the issues raised before them, observing that “a judgment has to be based upon the pleadings of the parties before it and the prayers made before it.”
Set-off under subsequent PPAs
The Tribunal also examined deductions made by Bengaluru Electricity Supply Company Limited (BESCOM) amounting to Rs 1.56 crore from Tata Power Trading’s bills under separate PPAs executed on November 14, 2014, and February 27, 2015.
KERC had upheld these deductions on the principle of equitable set-off. APTEL disagreed, holding that equitable set-off can only be applied where competing claims arise from the same transaction.
Relying on the Supreme Court’s decision in Jitendra Kumar Khan v. Peerless General Finance & Investment Co. Ltd. (2013), the Tribunal held that claims arising from separate PPAs cannot be adjusted against each other without prior adjudication.
Regulatory implications
The judgment provides important clarification on the role and liabilities of electricity traders in the sector. APTEL observed that a trading licensee acts as an intermediary and cannot automatically be treated as a generator for the purpose of assigning liability, particularly in cases involving scheduling and UI Charges.
The ruling also reinforces the principle that regulatory commissions must remain within the boundaries of pleadings and cannot grant relief that has neither been sought nor claimed by the parties.
With the matter now remanded to KERC for consequential orders, the decision is likely to be referenced in future disputes involving electricity traders, short-supply obligations and the treatment of cross-claims under multiple PPAs.
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