HSA Advocates successfully represented Solitaire Powertech Private Limited before the Central Electricity Regulatory Commission (CERC) in a significant matter concerning the application of the Discounting Factor to Change-in-Law claims arising from the introduction of Goods and Services Tax (GST) laws. The CERC order clarifies the interpretation of annuity-based compensation mechanisms following the introduction of the GST regime.

Solitaire Powertech Private Limited (SPPL), a solar energy developer, operates a 30 MW solar power plant in Karnataka, developed under a Power Purchase Agreement (PPA) with the Solar Energy Corporation of India (SECI).

The dispute arose from SPPL’s claim that the implementation of the Central, Integrated, and State Goods and Services Tax laws from July 1, 2017, entitled it to Change-in-Law compensation spread over a 13-year annuity period starting from the Commercial Operation Date (COD). While the SECI acknowledged its liability under the Change-in-Law framework, it applied the Discounting Factor only from the date of first payment, following a lump-sum disbursal for the delayed period, effectively reducing SPPL’s monthly annuity and resulting in significant under-recovery. Rejecting SECI’s contentions, the Commission held that the Discounting Factor of 10.41% must apply to the entire principal amount from the date of COD and not merely from the date of the first payment. The CERC emphasized that carrying cost and interest are intrinsic to the restitutive principles embedded in Change-in-Law provisions and clarified that Late Payment Surcharge (LPSC) would be applicable on delayed monthly annuity payments under the PPA. CERC directed a reconciliation of the differential amount to ensure SPPL’s full restitution.

This ruling marks an important development for solar developers, impacted by retrospective adjustments in Change-in-Law compensation, and underscores the importance of adhering to the principle of the time value of money in regulatory compensation.

HSA Advocates represented SPPL in the matter, with our team comprising Founding Partner Hemant Sahai, Partner Nitish Gupta, and Principal Associate Nimesh Jha.

The firm advised on legal strategy, drafted pleadings, and represented the petitioner in proceedings before the CERC.