Adani Power's Tiroda thermal plant in Maharashtra has run for years with a change in law compensation mechanism tied to the cost of domestic coal, the kind of arrangement power purchase agreements commonly build in because a generator's fuel cost is not fully within its own control and government policy on coal pricing and allocation shifts periodically after a tariff is set. When a coal shortfall or a change in the applicable coal cost occurs, the generator is entitled to compensation calculated against previously agreed operational parameters, so that neither side bears a cost shock the contract did not allocate to them.
The Maharashtra Electricity Regulatory Commission had already dealt with the Tiroda plant's domestic coal shortfall compensation issues once, in an order passed in 2020. Adani Power's grievance before APTEL was that MERC, years after that 2020 order, reopened the same settled issues and conducted fresh hearings on questions the Commission had already decided, rather than simply computing the compensation due under the parameters it had itself already fixed.
APTEL's bench of Officiating Chairperson Justice Seema Gupta and Judicial Member Virender Bhat was unimpressed with that approach. The tribunal pulled up MERC specifically for holding fresh hearings on matters it had treated as settled in 2020, a rebuke aimed at the regulatory process rather than at the substantive compensation formula itself. Reopening a question that has already been decided, without some new and legally sufficient basis for doing so, undermines the finality that a tariff or compensation order is supposed to provide to both the generator and the distribution licensees who have to budget around it.
The tribunal set aside the impugned MERC order on that basis and went further than simply remanding the matter back for more hearings. It directed MERC to issue fresh consequential tariff orders within six weeks, computing the change in law compensation using the operational parameters that had previously been prescribed, rather than parameters arrived at through the fresh hearings APTEL had just found objectionable. The direction effectively tells the state regulator what inputs to use and on what timeline, leaving it comparatively little room to relitigate the underlying entitlement once more.
The ruling is part of a broader pattern of APTEL scrutinising how state regulators handle coal-linked change in law claims from large thermal generators, with Adani Power and Tata Power's projects both having been the subject of CERC and MERC orders that APTEL has reviewed and, in several instances, found wanting on similar grounds of reopening settled questions or applying parameters the power purchase agreement and earlier orders did not support.
For generators with long-running change in law claims tied to coal costs, the order reinforces that a regulator's own earlier order fixing the operational parameters for compensation carries real weight against a later attempt to revisit those parameters through a fresh round of hearings. Distribution licensees and state regulators, for their part, should treat a prior compensation order as largely closing the computational questions it answered, reserving fresh hearings for genuinely new change in law events rather than a second look at an old one. The six week deadline APTEL imposed on MERC also signals that appellate tribunals are willing to set concrete timelines for state commissions to give effect to a successful appeal, rather than leaving compliance open ended.
The six year gap between MERC's original 2020 order and APTEL's intervention also says something about how long a generator can be made to wait for money a regulator has, in principle, already agreed is owed. A change in law mechanism exists precisely to keep a generator financially whole when fuel costs or government policy shift in ways the power purchase agreement did not price in; a mechanism that takes years of further litigation to actually pay out undercuts much of its practical value, even where the generator eventually wins. That gap is likely to feature in future submissions from generators arguing that state commissions should resolve change in law claims within a defined timeframe rather than allowing them to be revisited indefinitely.