Uttarakhand penalizes UPCL for non-compliance of RPOs

After a prolonged wait and significant suffering of RE stakeholders, finally, a regulatory body has shown its true strength and purpose by imposing the penalty on an RPO defaulting entity – a first ever penalty imposed on any obligated entity in India. The case matter is as follow:

In December 19, 2012, UERC (Uttarakhand Electricity Regulatory Commission) had ordered state DISCOM – Uttarakhand Power Corporation Limited (UPCL), to carry forward the unmet RPO for FY 2011-12 for both solar as well non-solar sources to 2012-13 which were to be met alongwith the RPO for FY 2012-13.

  • Subsequently, in September 11 – 2013, UPCL was directed to procure RECs for unmet RPO of 59.12 MUs (59,120 REC equivalent) of non-solar sources for FY 2011-12 within 2 months, i.e. by November 15, 2013 failing which UPCL would be liable for appropriate action u/s 142 of Electricity Act, 2003.
  • In the same order, UPCL was also allowed to carry forward the unmet RPO of FY 2012-13 for both solar as well as non-solar sources to FY 2013-14 which was to be met with its obligation for FY 2013-14 by March 31, 2014 failure of which may attract action against it under Section 142 of the Electricity Act, 2003.

However, UPCL paid no heed to UERC’s directives and failed to comply with Commission’s order.  The Commission also acknowledged that “UPCL has been time and again making repeated non-compliance of the directions issued to it under the Act & Regulations inspite of the fact that numerous opportunities has been provided to it to mend its affairs.” Further, the Commission also commented that “ignorance of law is no excuse. UPCL being a commercial organization and a licensee under the Electricity Act, 2003 has to ensure compliances of the Act, Rules and Regulations made there under.”

UERC has considered UPCL’s non-compliance as willful contravention of the direction of the Commission and has imposed penalty of Rs.20,000/- on the Managing Director of UPCL. The Commission has also directed UPCL to comply its pending RPO by March 2014, failure to which will attract additional penalty of Rs.2000/Day thereafter.

This order brings a ray of hope for all the RE Generators in India who have desperately been waiting to see any positive step towards compliance. This order will certainly boost confidence of RE fraternity towards an almost written-off REC market.

The order can be read here

REC Trade Report – January 2014

January 2014 marks first month of Q4 for FY14. Overall the clearing volumes for both type of RECs were marginally less than previous month. As per REC Registry, the market redeemed a total of 3.65 lakh RECs.

Non-Solar RECs :

Buy bids for non-solar credits went down by 11 percent in comparison to last month’s stats.. Clearing percentages at both exchanges largely varied. The total transactional value of non-solar RECs was 538 million INR, with price of each non-solar REC remaining at floor (Rs. 1500 per Non Solar REC).

Solar RECs:

Demand of solar RECs tumbled by 19 percent compared to December 2013 trade session. Solar RECs continued to trade at floor price (Rs. 9300 per solar REC). Evidently total solar REC transactional value was also recorded low at about 59.2 million INR. As per REC registry, only 6361 solar RECs were redeemed. With only two months remaining in current financial year, market rebounding to encouraging figures seems far from reality.

For a similar blogpost covering analysis on previous months trade session – click here

 

ApTel sets aside Tamil Nadu Solar policy

As per reports, Tamil Nadu’s ambitious solar policy, once assumed to be a game-changer for fostering solar power in the state, has been set aside by the Appellate Tribunal of Electricity (ApTel). A capacity addition of 3000 MW was envisaged under the solar policy till 2015.

“Solar Purchase Obligation (SPO)”; policy’s main driver of demand, has been confronted with a lot of criticism. Various consumer associations had approached relevant forums against such a binding mandate which required solar energy consumption to be 6% (from Jan 2014) out of total energy consumption. According to an article in The Hindu (dated July 7th 2013), Tamil Nadu Electricity Consumers Association (TECA) went to ApTel in June 2013, saying that consumers will not have the required solar energy capacity. According to submissions in the present order by the appellants, TN requires an installed solar capacity 720 MW in the year 2013 and 1500 MW in 2014, to make solar power available for compliance with SPO and RPO targets.

TANGEDCO as a respondent in the order has said that solar RPO of 0.05 % ceased from being into effect from the time SPO was introduced by the state commission.

TANGEDCO, last year, had floated tenders which has currently around 700 MW of solar projects awaiting execution of power purchase agreements. The solar power price discovered through, competitive bidding mechanism,was Rs. 6.48 per unit. Following this recent ApTel order, TANGEDCO is in a fix whether to scrap solar power purchase obligation or to buy power from solar projects and subsequently move TNERC to raise tariffs, to accommodate additional cost of buying costlier solar power.

A copy of this order can be found here.

Media Articles are available in the following links-

The Hindu Businessline

The Hindu  – (dated 6th Nov 2012)

Our relevant blogpost can be read here.

Link to Tamil Nadu’s Solar Policy 2012

Maharashtra cuts power tariff by 20 percent

Govt. of  Maharashtra, on Monday (20th Jan 2014) posted a perfect example of political interference in the functioning of an important sector. Following the footprints of the incumbent Govt. in Delhi, Maharashtra also has approved a 20 % cut in power tariffs for residential, commercial and industrial consumers covered by its state run distribution company (MahaVitran). Such a concession is although not extended to Mumbai consumers owing to power supply from private distribution companies – Reliance Infrastructure, Tata Power and BEST.

According to a senior minister, the recommendation for a power tariff cut comes in response to huge pressure from all sections. As per an article in Business Standard, MahaVitran has warned of incurring huge losses following such a decision. The state Govt. is expected to bear an extra burden of Rs. 706 crore a month.

The proposal will now be put across the state regulator –  MERC for final implementation.

For relevant media articles click on the following link -

Business Standard

The Hindu

The Hindu Business Line

For our previous blogpost on Maharashtra’s cross subsidy hike – click here

Amendment to Grid Code & Frequency for UI charges finalised by CERC

Hon’ble CERC within the very first week of 2014, has come up with amendments to two important regulations pertaining to Indian power sector. The commission rolled out the following regulations (orders can be accessed by clicking links below):

1) Central Electricity Regulatory Commission (Indian Electricity Grid Code) (Second Amendment) Regulations, 2014.

2) Central Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) Regulations, 2014.

In the following section, we limit our analysis to various amendments relating to the RRF mechanism.The Statement of Reason (SOR) for the changes has not yet been made available in the CERC website. We will share a more detailed analysis and the SOR when it is made available. These key changes (in context of RRF mechanism) are analysed and enumerated below:

  • Definition of pooling substation has been modified. In the draft Amendment, the implication was that new capacity being added on old sub-stations would be covered under the RRF mechanism. However, this stand has now been reversed – only those sub-stations commissioned after 3/5/2010 are covered under the RRF mechanism
  • Scheduling has been in effect from 15/7/2013. One revision for each time slot of 3 hours starting from 00:00 hours of a particular day subject to maximum of 8 revisions during the day are allowed.
  • The forecast is required to achieve an accuracy of 70%. Therefore deviation beyond +/- 30% will attract UI charges to be borne by the generator. However, this clause will become applicable from a date to be specified by CERC in the future. (Clause 5 of Annexure I of IEGC)
  • It is noteworthy that Clause 6 of Annexure I of IEGC which restricts the deviation to 150% of the schedule still remains intact. In case generation exceeds 150% of the generation, a fixed UI charge (corresponding to 50-50.02 HZ) will be payable, and the PPA rate will not be payable.
  • The above changes will come into effect from 17/2/2014
In another important regulation released by CERC, the commission has finalized a narrowed frequency band for charging deviation based on unscheduled interchange (UI).The UI charges finalized in the latest CERC (Deviation Settlement Mechanism and related matters) Regulations, 2014, is at variance with that proposed in draft notification (refer) issued on 20th June 2013. The new UI charges  have maintained clemency for generators (refer graph below).

 Our previous posts on RRF Mechanism can be read here.

 

Govt mulling to introduce hydro tradable certificates

As per an article in Economic Times (refer), government is using an accelerated approach towards promotion of India’s hydro power assets. A recent progress on this pertains to introduction of tradable hydro certificates (on the lines of RECs). Demand for these tradable hydro certificates will be generated from a separate hydro power purchase obligation, a concept note on which has already been circulated among various stakeholders. A relevant amendment to Electricity Act,on the issue, is also likely to be tabled.

In India, hydro power has huge installed capacity in northern and north-eastern states. This unequal distribution can be fixed by making states procure a certain fixed quantum of hydro power.

India has 144320 MW of potential out of which only 40,000 MW has been commissioned.

Other relevant news on hydro power can be read here.

Andhra Pradesh declares APPC for FY 2013-14

An order dated 28th December 2013, for determination of APPC of FY 2012-13 (for FY 2013-14), considered 6,88,79.12 MUs of power bought at  22,594.78  crore INR by discoms of the state.

Accordingly the APPC for FY 2013-14 is finalized to be at Rs. 3.28/unit.

The following can be read on the payment adjustment issue -

“The difference between the provisional pooled cost of power purchase @ Rs 2.69/kWh (of FY 2011-12 considered for FY 2012-13) and the pooled cost now determined shall be paid to the developer in six equal monthly installments.”

All relevant orders on APPC in other states can be accessed here.

Our previous coverage on APPC of FY 2012-13 in Andhra Pradesh can  be accessed here.

The present order can be read here.

 

Madhya Pradesh takes note of non-compliance in solar RPO

On 20th November 2013, in petition no. 35/ 2013, MPERC took serious note on the issue of non-compliance of solar RPO by state utilities/discoms. It can be read in the order as:

Notwithstanding the aforesaid, the Commission is constrained to express serious concern on the lack of effort on the part of the utilities in fulfilling their respective RPOs. More than four months of the current financial year still remain and the respondents are directed to pursue renewable energy procurement to the maximum so that the shortfall against the RPO is minimized. Continuous failure on the part of utilities in this regard cannot be allowed to go unpunished.

MPERC also asserted that the petitioner & other such parties have never had any intention of selling power to discoms, despite being located within the state, as for such parties, opting  for REC mechanism brings exorbitant profits. This act is depriving the state discoms from solar power procurement as the same quantum of power (claimed by solar generators for REC) cannot be claimed by discoms towards fulfillment of their solar RPO targets.

However, MPERC shied away from taking a stern decision. Although, MP’s likelihood for solar RPO compliance has been estimated as high.

Previously, in September 2013, MPERC, through a fresh directive, had offered to account additional cost with regards to RPO compliance in true-up exercise.  More on this directive can be found by following this link.

The present order can be accessed here.

South Grid successfully synchronized with National Grid

According to a Press Release from the Ministry of Power on the eve of first day of new year 2014, the much awaited grid synchronization of south grid with National Grid has been successfully accomplished. This marks a major milestone in the history of Power Industry. With this. the long cherished dream of “One Nation One Grid”  is now a reality.

With a single large grid operational in India, accommodating a huge power capacity of 232 GW, India’s national grid is one of the largest grid in the world. This step will largely benefit a power starved condition of the southern grid, which currently had inability to transmit surplus power to the national grid or draw power from national grid in case of power deficiency. A single grid bestows grid managers with even greater responsibility of efficient grid management. Lapses that caused grid failures in July last year, will now have fatal consequences, affecting the entire nation at once. On a brighter side, such synchronization, will further open up the power sector in India. The price discovery in short-term electricity markets will now witness a downward trend in southern region.

In achieving such a milestone, efforts of BHEL Limited are laudable, as it completed work on 765kV Raichur-Sholapur transmission link, months before schedule. A coverage by The Hindu, on this, can be read here.

In October 2013, CEA, through a letter had urged CERC to expeditiously switch to a new-narrowed frequency band, contemplating gird synchronization work to be finished in beginning of the new calender year. Our coverage on the same can be read here.

Relevant media reports can be read as below:

The Hindu

Times of India

Live Mint

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