The Andhra Pradesh Southern Power Distribution Company (APSPDCL), one of the electricity distribution companies (discom) of Andhra Pradesh, is now staring at a loss of revenue as the electricity appellate tribunal (APTEL) has ordered for cancellation of ‘renewable energy certificates’ (REC) issued to the discom.

APSPDCL was issued 59 lakh RECs, worth at least ₹609.29 crore, by the National Load Dispatch Centre, for the discom’s ‘entitlement’ for 2018-19. The issuance was upon the recommendation of the state electricity regulatory, APERC.

The Kolkata-based Techno Electric Engineering Co Ltd, which owns renewable energy plants and builds transmission lines for other companies, was upset that APSPDCL was issued the REC. Techno Electric held the certificates were issued illegally, on the grounds that the discom had not met its renewable purchase obligation in an earlier year and therefore, legally, could not be incentivised for over-meeting its obligation in a subsequent year.

Techno Electric proceeded against APSPDCL, AP’s electricity regulator and NLDC, praying for cancellation of the RECs issued. The respondents argued, asking ‘what is your problem’, to which Techno Electric replied that the discom was inundating the market with the illegally procured RECs, saturating the demand and thereby causing financial injury to it (Techno Electric).

APTEL has upheld Techno Electric’s contention. Justice Manjula Chellur, Chairperson and SD Dubey, Technical Member, noted that APERC granted the incentive to APSPDCL “inspite of RPO deficit in 2017-18.” Observing that RECs should be issued only if the conditions are complied with, they said that APERC “ought not to have recommended the case of APSPDCL for issuance of RECs for 2018-19.”

Accordingly, they ruled that while the RECs already sold in the market by APSPDCL “need not be disturbed”, the unsold certificates shall be revoked.

It is not clear how many of the 59 lakh certificates have been sold by the discom, but Techno Electric, in its submission, had said that the discom had sold 6 lakh certificates in March 2020.