Hon’ble Rajasthan Electricity Regulatory Commission (RERC) has recently proposed an amendment to its principal RPO regulations. Comments have been invited by all stakeholders no later than 18th March 2014. Link to the proposal – http://rerc.rajasthan.gov.in/cnpl/PDFs/REC.pdf

These changes, if incorporated into the RPO regulations will have significant impact on CPPs and OA in Rajasthan.

Following are the highlights of such changes –

1)      Solar RPO will have to be fulfilled separately,

2)      Co-gen and WHR power will no longer be allowed to offset RPO, and

3)      The RPO percentages will increase.

4)      Stricter enforcement of RPO likely.

The proposed changes are discussed in detail below:

Inclusion of Solar RPO for captive power plants (CPP) and open access consumers (OA):

In the present regulation there is no separate solar RPO. As a result in most cases CPPs and OA consumers would meet their obligations through non-solar sources. The proposed amendment introduces a separate carve-out for solar RPO that can be met through solar power/ solar REC alone.

However, the requirement of meeting solar RPO separately will only apply to CPPs and OA of 10MW or more installed capacity. CPPs and OA below 10 MW will be required to meet RPO in total only, as is the present case.

This change will bring Rajasthan RPO in line with most other state RPO regulations, and also in line with the National Tariff Policy. After this change, Karnataka will remain the only exception where CPP and OA do not have a separate Solar RPO.

Removal of Co-generation as RE power:

The present regulation considered co-generation as equivalent to RE power. As a result several CPPs and OA could fulfill their RPO obligations by consumption of co-gen power. In a separate pronouncement, the Rajasthan Electricity Regulatory Commission (RERC) has considered Waste Heat Recovery (WHR) as co-generation.

The proposed amendment will not allow offsetting of RPO from conventional power generation or OA from co-gen power. This change follows the recent order of ApTel in the case of Lloyds Metal & Energy. The order can be accessed here. Our blog-post covering the issue can be read – here.

In the above order, ApTel has stated the following:

Upon conjoint reading of the provisions of the Electricity Act, the National Electricity Policy, Tariff Policy and the intent of the legislature while passing the Electricity Act as reflected in the Report of the Standing Committee on Energy presented to LokSabha on 19.12.2002, we have come to the conclusion that a distribution company cannot be fastened with the obligation to purchase a percentage of its consumption from fossil fuel based co-generation under Section 86(1)(e) of the Electricity Act, 2003. Such purchase obligation 86(1)(e) can be fastened only from electricity generated from renewable sources of energy.

It is important to note that co-gen power will continue to be exempted from RPO (as per several orders from ApTel earlier). However, such power will no longer be allowed to offset RPO emanating from other sources like conventional generation or OA. This change will bring Rajasthan RPO regulations in line with the regulations of most states, and with the interpretations of Aptel.

Increase in RPO percentages:

The proposed RPO percentages are:

CPP & OA Consumer with total capacity of 10 MW and above:

Year Non-solar RPO Solar RPO Total RPO
2014-15 7.50 1.50 9.00
2015-16 8.20 2.00 10.20
2016-17 8.90 2.50 11.40

CPP & OA Consumer with total capacity of more than 1 MW bet less than 10 MW:

Year

Total RPO %

2014-15

9.00

2015-16

10.20

2016-17

11.40

Stricter enforcement of RPO likely

RERC notes the following in the proposed amendment: certain CPP & Open Access Consumer have made an appeal in Hon’ble Supreme Court against this order of Hon’ble[Rajasthan] High Court. As there is no stay in the matter, the obligated entities are bound to comply with RPO mandate. Further, RERC has also mentioned that the state agency is in the process of identifying compliance levels by CPPs and OA in the state. These comments point to a stricter enforcement of RPO in the near future.