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APTEL Confirms Termination of PPAs by Andhra Pradesh Wind Energy Companies

The Appellate Tribunal for Electricity (APTEL) has upheld the decision of wind power generators, Vaayu (India) Power Corporation and Vishwind Infrastructure, to terminate their power purchase agreements (PPAs) with the Southern Power Distribution Company of Andhra Pradesh (APSPDCL).
This landmark ruling follows APSPDCL’s persistent payment defaults, a situation previously highlighted by the Andhra Pradesh Electricity Regulatory Commission (APERC). The Tribunal also granted the companies permission to sell power through open access arrangements.
The dispute arose from PPAs signed between APSPDCL and the two wind energy companies for projects in the Kurnool district. Vaayu’s project accounted for 50.4 MW, while Vishwind’s contributed 7.2 MW. These agreements were initially based on a tariff of Rs 3.50 per unit for the first decade, with tariffs beyond that to be determined by APERC.
From the outset, the generators provided power and issued invoices regularly. However, by 2020, delayed payments became a recurring issue. Vaayu sought intervention from APERC, which resulted in interim orders prompting APSPDCL to make partial payments. Despite this, substantial arrears remained unresolved.
In early 2023, both companies issued preliminary termination notices, citing APSPDCL’s continued defaults. When APSPDCL failed to respond, the companies formally terminated the agreements and petitioned for no-objection certificates (NOCs) to sell their power through open access. This led to further disputes and hearings before APERC. APTEL ruled that APSPDCL’s chronic payment failures constituted a breach of contract. The Tribunal emphasized that the company’s subsequent payments could not retroactively address prior defaults.
Highlighting the generators’ rights to safeguard their financial interests, APTEL concluded that the termination of the PPAs was justified. It directed APSPDCL to issue the required NOCs, enabling the wind power generators to sell electricity under open access frameworks.