Commercial operation date requirements and waiver limits in power purchase agreements cannot override tariff-linked consumer interest.

A contractual commercial operation date under a power purchase agreement could not be treated as achieved where the performance test certificate did not satisfy the stipulated 95% contracted-capacity standard and the commissioning conditions remained unmet. The Court held that waiver of that requirement was not established because waiver needs a clear and intentional relinquishment of a known contractual right; the correspondence showed only a limited operational acceptance of de-rated capacity, not waiver of the COD condition. It further held that any waiver affecting tariff in a competitively bid electricity arrangement could not be enforced where it would prejudice consumer and public interest. The finding accepting COD on 31.3.2013 and waiver was therefore set aside.

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Issues: (i) Whether Unit No. 3 of the project could be treated as having achieved commercial operation on 31.3.2013 under the power purchase agreement, despite the performance test certificate showing tested capacity far below the contracted capacity and the requirements of the commissioning schedule not being satisfied. (ii) Whether the procurers had validly waived the contractual requirement of achieving 95% of contracted capacity, and whether such waiver could be given effect to when tariff and consumer interest were affected.

Issue (i): Whether Unit No. 3 of the project could be treated as having achieved commercial operation on 31.3.2013 under the power purchase agreement, despite the performance test certificate showing tested capacity far below the contracted capacity and the requirements of the commissioning schedule not being satisfied.

Analysis: The contractual scheme required synchronization, commissioning, and then commercial operation only after a final test certificate recording successful performance testing at not less than 95% of contracted capacity for 72 continuous hours and compliance with the relevant functional requirements. The certificate dated 30.3.2013 recorded tested capacity of only 101.38 MW, did not satisfy the contractual performance standard, and did not answer the stipulated requirement for commercial operation. On the record, the later certificate in August alone satisfied the contractual preconditions.

Conclusion: Unit No. 3 could not be treated as having achieved commercial operation on 31.3.2013; the contractual COD did not arise on that date.

Issue (ii): Whether the procurers had validly waived the contractual requirement of achieving 95% of contracted capacity, and whether such waiver could be given effect to when tariff and consumer interest were affected.

Analysis: Waiver under contract law requires a clear and intentional relinquishment of a known right. The correspondence relied upon showed only a refusal to accept the 30.3.2013 certificate as compliance with the contractual standard and a limited acceptance of de-rated capacity for immediate operational purposes. The Court further held that any waiver affecting tariff under a competitively bid power purchase structure would impact consumer interest and public interest, and therefore could not be enforced without satisfying the statutory framework governing tariff and bidding-based adoption.

Conclusion: There was no valid waiver of the 95% requirement, and in any event such a waiver could not be given effect to where it would adversely affect consumer and public interest.

Final Conclusion: The appellate finding accepting COD on 31.3.2013 and upholding waiver was set aside, and the regulatory commission's view was restored on the central questions of contractual compliance and public-interest limits on waiver.

Ratio Decidendi: A contractual condition in a competitively bid electricity tariff arrangement that is integral to commissioning and affects consumer tariff cannot be waived except by a clear intentional relinquishment, and such waiver will not be enforced where it undermines public or consumer interest.

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