Maharashtra state electricity distribution company limited (MSEDCL) has requested the Hon’ble MERC to consider passing on the cost due to renewable energy purchase to Industries of the state. As per MSEDCL, Industries in the state are responsible for pollution and climate change and consequently they should be burdened with higher purchase cost of RE, not common consumers.
MSEDCL has provided the average cost of RE power purchase to be : Rs. 3.81 per unit, Rs 4.12 per unit, Rs. 4.26 per unit & Rs. 4.32 per unit for FY11 to FY13 respectively. Based on this MSEDCL has requested to segregate the RE power purchase from the ARR so that the overall tariff gets reduced, even-though, a cursory look reveals that the %age in such increase is declining on year to year basis (8.31% to 3.3 % to 1.41 % finally for FY13).
In the form of an additional information, MSEDCL in the order has elaborated that it has met the RPO targets of FY11 and FY12 and has tied with adequate renewable capacity to meet RPO of FY14. However, it has mentioned that due to infirm nature of RE power, challenges remain in claiming the contracted capacity as RE purchase capacity.
However, in the present order Hon’ble commission has stated that burdening one category of consumers with higher tariff is a matter of tariff determination process and has held that such a decision will be appropriately taken up during tariff determination of MSEDCL.
Copy of the order.
The electricity regulatory commission of Haryana – HERC in an order dated 20th Nov 2013 has declared tariff for all renewable energy projects to be commissioned in FY 2013-14.
Following are the numbers for various projects -
Solar PV (Crystalline) – Rs. 5.70 per unit.
Solar PV (Thin Film) – Rs. 5.36 per unit.
Solar (Rooftop) – Rs. 5.32 per unit.
Solar (Thermal) – Rs. 11.60 per unit.
Wind (300-400 W/m2) – Rs. 3.62 per unit.
Biomass (water cooled) – Rs. 6.97 per unit.
Biomass (air cooled) – Rs. 7.05 per unit.
Co-generation (bagasse) – Rs. 4.15 per unit.
It is important to note that the tariff for solar projects (PV Crystalline) has been the lowest as compared to tariff in states of Punjab, Rajasthan, UP, MP, Maharashtra & Gujarat (Source – www.ireed.org MNRE GOI). Likewise, the tariff for co-generation was also the lowest in comparison to tariff in above mentioned states.
This downward trend of tariff is a sign of progressiveness towards reaching grid parity for RE technologies.
The order can be assessed here.
Maharashtra Electricity Regulatory Commission on 29th October 2013, rolled out an order which raises the cross subsidy surcharge (CSS) to a level which can be detrimental for the growth of power market in the state. This is MERC’s second revision to CSS charges in a single year. Such an increase in CSS is against Electricity Act 2003 and National Tariff Policy.
Recently, the Hon’ble Ministry of Power has also emphasized in an amendment to Electricity Act 2003 (refer) that respective State commissions have the responsibility to specify a road-map for time bound reduction of cross subsidies. This move by the commission defeats the very purpose of open-access in power markets of India.
The exorbitant rise in CSS is well illustrated by a graphical analysis :
Fig: Graphical analysis of CSS hike
The order can be assessed here.
A relevant media article can be assessed : Business Standard.
The Ministry of Power (MOP) recently made public a document that proposes various changes to the Electricity Act, 2003 (EA). The below article provides a quick summary of the proposed changes:
- The current role of the Distribution Licensee has been broken up into system business (Distribution) and supply (supply licensee).
- In the new system, the Distribution Licensee will be responsible for “operate and maintain a distribution system to enable supply of electricity”
- The role of supplying electricity will be that of a the “supply licensee”
- This segregation of system operation and supply is a major step, and down the road will allow multiple licensees to operate in a single area.
- The state government will devise a scheme to effect such a segregation
- The supply licensee will have to take “Universal Service Obligation”. The proposed draft requires the licensee to be “supplier of last resort” and also that they will not resort to load shedding or power cuts.
- Efforts for development of forward markets have been emphasized
- The State Commission has been made responsible to specify a road-map for time bound reduction of cross-subsidies
- Proceedings before a Commission will be disposed of within 120 days. In the event of delay, the Commission will record the reason for such a delay
- Penalty under section 142 has been increased from Rs 1 lakh to Rs 50 lakh. Additional penalty for each continuing day of default increased from Rs 6,000/ day to Rs 50,000/ day
- Definition of Renewable Energy has been introduced.
“”renewable energy sources” means renewable sources such as small hydro, wind, solar including its integration with combined cycle, biomass, bio fuel co-generation, urban or municipal waste and other such sources as approved by the Central Government in consultation with MNRE from time to time prescribed.”
The proposed amendment leaves out some very important changes from the renewable energy perspective.
- The state RPO regulations have a weak penalty clause – penalty at the forbearance price of RECs needs to be set aside by the company and used for specified purposes and on the directions of the commission. However, incorporating this in Section 142 would have made it much stronger
- There has been ongoing confusion (and various petitions) on the issue of jointly promoting cogeneration and renewable energy. The issue stems from the reading and interpretation of the EA. However, the current draft does not attempt to clarify this issue.
- CERC, in Statutory Advise given to the Ministry of Power (dated 28 Dec 2011) had said that “we build in the Act itself the requirement for a long-term RPO trajectory and deterrent against non-compliance of RPO”. It further mentioned that a penalty for non-compliance of RPO can be in addition to that already under section 142.
- The Statutory Advise also incorporated points on specific market instruments like REC, on definition of co-generation and specific provision on RPO applicability on open access consumers and captive power producers
- However, the draft does include a clause that makes the National Electricity Policy and Tariff Policy “binding on all including Appropriate Commissions, Appropriate Government, authorities, licensees, generating companies (and) consumers.”
At present RPO trajectory is defined in the National Action Plan for Climate Change. Solar RPO trajectory was also included in the National Tariff Policy by way of an amendment. If these policies indeed become ‘binding’ then it will pave the way for easier changes and implementation of RPO and development of REC markets. Nevertheless, in our opinion, a direct reference in the EA would have been stronger. And the need for the