In a significant regulatory development, Ponni Sugars (Erode) Ltd has secured a favorable verdict from the Appellate Tribunal for Electricity (APTEL), which has directed the Tamil Nadu Electricity Regulatory Commission (TNERC) to issue fresh orders in compliance with legal norms. The ruling marks a major win for captive power producers and sets a precedent for tariff-related disputes in Tamil Nadu’s industrial landscape.
Background and Context
Ponni Sugars had challenged TNERC’s 2019 order that mandated captive generating plants to pay Parallel Operation Charges (POC) under Regulation 26 of the TNERC Grid Connectivity and Intra-State Open Access Regulations, 2014. The core contention was that TNERC levied these charges irrespective of whether the plants had opted for parallel operation with the grid, which Ponni Sugars argued was contrary to the regulatory framework.
The appeals were filed in 2019 and have been under review for several years. On June 16, 2025, APTEL delivered its judgment, allowing Ponni Sugars’ appeal and directing TNERC to revisit its earlier stance.
Key highlights of the APTEL verdict
• APTEL ruled that Parallel Operation Charges are applicable only to captive generating plants that have formally opted for parallel operation with the grid by submitting the requisite application and fee
• The tribunal set aside TNERC’s January 2019 order and the earlier tariff order dated August 2017, which had imposed blanket charges on all captive generators
• The judgment was part of a batch of appeals, indicating broader implications for other industrial players in Tamil Nadu with similar grievances
Financial implications for Ponni Sugars
• Ponni Sugars had provisioned approximately Rs. 4.95 crores towards POC liabilities, including accrued demands till March 2025
• With the APTEL ruling, this provision is expected to be reversed in the first quarter of FY 2025–26, offering a substantial relief to the company’s balance sheet
• The reversal also improves Ponni Sugars’ financial outlook, especially in the context of rising input costs and regulatory uncertainties in the power sector
Impact on Tamil Nadu’s regulatory landscape
• TNERC is now obligated to pass fresh orders that align with APTEL’s interpretation of the Open Access Regulations
• The ruling may prompt TNERC to revisit its approach to captive power regulation, especially for sugar mills and other agro-industrial units that rely on bagasse-based co-generation
• This could lead to more transparent and equitable tariff structures, encouraging investment in renewable and captive energy solutions
Industry reactions and broader significance
• The South Indian Sugar Mills Association (SISMA-TN), which had supported Ponni Sugars’ appeal, welcomed the verdict as a victory for regulatory fairness
• Legal experts suggest that the judgment reinforces the principle that tariff levies must be based on actual operational choices, not presumptive liabilities
• The case also highlights the importance of judicial oversight in ensuring that regulatory bodies adhere to procedural and statutory norms
Next steps
• TNERC is expected to issue revised orders in the coming weeks, potentially redefining the tariff landscape for captive generators in Tamil Nadu
• Ponni Sugars will likely update its stakeholders on the financial adjustments and strategic implications stemming from the ruling
• Other affected industries may now consider filing similar appeals or seeking redressal based on the APTEL precedent
Conclusion
The APTEL ruling in favor of Ponni Sugars (Erode) Ltd is more than a legal victory—it’s a turning point in Tamil Nadu’s power tariff regulation. By reinforcing the need for procedural compliance and fair levies, the judgment paves the way for a more rational and investor-friendly energy framework. As TNERC prepares to issue fresh directives, stakeholders across the industrial spectrum will be watching closely.
Sources: Ponni Sugars (Erode) Ltd official disclosure, Appellate Tribunal for Electricity (APTEL), Tamil Nadu Electricity Regulatory Commission (TNERC), DTNext, InstaPDF, Government of Tamil Nadu Tariff Orders
