SKV law Offices successfully represented Tata Power Company Limited before CERC in Petition seeking compensation for power supply under Ministry of Power’s Section 11 Directions, 2023
01.05.2026
Background
Tata Power Company Limited (“TPCL“) filed the present petition seeking determination of adverse financial impact under Section 11(2) read with Section 79 of the Electricity Act, 2003, arising from directions issued by the Central Government under Section 11(1) of the Act for the period 15.03.2023 to 16.06.2023 (“2023 Directions“), and subsequently extended by the MoP up to 15.10.2024. By an interim order dated 10.03.2025 (‘Interim Order’), CERC determined TPCL’s entitlement to interim relief, primarily on account of the higher FOB price of imported coal, computed at USD 84.90/MT.
DISCOMS challenged the said interim order before APTEL. By its judgment dated 31.10.2025, APTEL, while upholding the interim relief, passed an order of limited remand directing CERC to compute TPCL’s entitlement in terms of its order dated 10.03.2025, for the period from 16.04.2023 to 10.03.2025, after hearing parties on either side.
Remand Proceedings
The principal dispute in the remand proceedings centred on the methodology for computing the FOB price of imported coal, specifically with respect to shipments procured on a CFR/CIF basis.
TPCL contended that its computation was in strict conformity with the methodology settled in CERC’s order dated 03.01.2023 in Petition No. 128/MP/2022, wherein the CIF cost is directly adopted for shipments procured on a CFR/CIF basis. DISCOMS argued that the CFR/CIF price must first be converted to an FOB price by deducting freight and insurance, and that the TPCL had failed to furnish actual FOB costs for CFR shipments, warranting adverse inference.
Issues Framed and Decided
The Commission framed and decided three issues:
Issue I – Treatment of CFR/CIF shipments: The Commission held that Para 82(e)(i) of the interim order dated 10.01.2025 refers specifically to the difference in Energy Charge Rate on account of the FOB price of coal. Accordingly, wherever coal has been procured on a CFR or CIF basis, the same must be converted to an FOB price by adjusting the quoted freight and insurance cost, as applicable.
Issue II – Freight and insurance charges for conversion: The Commission held that given the large variation observed in freight indices, it would not be appropriate to apply a specific market index (such as S&P Platts/Argus). Since the 2023 Directions impact only the FOB price, the remaining components must be governed by the PPA. Accordingly, where coal is procured on a CFR or CIF basis, the FOB price shall be worked out by adjusting the quoted freight and insurance rate and quoted handling charges as applicable under the PPA for the relevant year.
Issue III – Computation methodology: The Commission laid down a detailed methodology, as follows:
- Admissible FOB price for each shipment is determined as the lower of actual cost or the HBA(HPB) Index price with CFR/CIF shipments first converted to FOB by deducting quoted freight and insurance.
- The final FOB price for interim relief is computed as Pi = P3 + (P1–P3)/2, where P1 is the admissible FOB price at actual GCV and P3 is the Committee’s FOB price adjusted pro-rata to actual GCV.
- The Landed Price of Coal is then built up by adding back freight, insurance, handling charges and applicable taxes, from which the Energy Charge Rate is derived using the standard formula in terms of the interim order dated 10.03.2025.
- On mining profit, the Commission adopted an equitable approach by taking the Petitioner’s figure as the base and deducting 50% of the differential between the parties’ figures, consistent with the treatment accorded to the FOB price component.
Outcome
Applying the above methodology to the TPCL computation (as modified), the Commission determined TPCL’s entitlement to interim relief for the period 16.04.2023 to 10.03.2025 as under:
| Particulars | Amount (₹ Crore) |
| Differential billing (ECR as per interim order vs. MOP notified ECR) | 1353.00 |
| Actual billing by Petitioner (50% of differential) | 676.50 |
| Entitlement as computed by CERC on remand | 650.89 |
The present proceedings, arising out of the limited remand, were disposed of accordingly. The main petition remains pending for final adjudication on merits.
TPCL was represented by Mr. Shri Venkatesh (Founding Partner), Mr. Shryeshth Ramesh Sharma (Senior Partner), Mr. Ashutosh K. Srivastava (Partner), Aashwyn Singh (Senior Associate) and Devishi Gupta (Associate).
Read the order here.