Amendment in Electricity Act Presented in Parliament

The amendment to electricity Act 2003 was presented in the parliament on 19th December 2014. It was expected that this amendment will bring about big reforms in the electricity sector.

The Government had earlier expressed its intention of bringing amendment in the Electricity Act 2003 along with the introduction of the Renewable Energy Act.

The amendment of The Electricity Act has been presented in the parliament by the government. The mains highlights of the proposed amendment are as below:

  1. The Concept of multiple distribution licensee will be introduced, meaning that a consumer will be have multiple options with regards to choosing its electricity supplier.
  2. The amendment proposes to separate the content and carriage business. Some companies will own the wire business while the other electricity suppliers or distributors will pay a specified fees to them.
  3. The timely revision of electricity tariff will be made mandatory under the proposed amendment. If the electricity suppliers do not approach the Regulatory commissions seeking revision in tariff, the commission will have the right to do so at its discretion.
  4. The Bill also proposes that a power generator can sell the surplus power generated within a state to entities outside it (Inter-state Open Access).
  5. The amendments proposes that the regulatory commissions can initiate Suo-motu proceedings to determine the rate in case a utility/generating company doesn’t file its petition on time. This will empower the regulatory commissions to take action on tariff determination and revision at the right time.
  6. The amendment also proposes that the central government will have power of imposing penalties of up to Rs. 1 Crore on entities violating norms under the Electricity Act.

The proposed changes will also promote competition, efficiency in operations and improvement in quality of supply of electricity, as private electricity suppliers will focus on bringing efficiency. But such models have already been experienced in some cities like Delhi and Mumbai, without much improvement. Promoting Open Access will induce more competition resulting in higher efficiency and competitive electricity prices, unless the commissions decide otherwise at the state level.

The timely revision of Discom tariffs has been a major area of concern, since losses or gains are linked with it to a greater extent. This amendment proposed to address the issue on a stricter note. Fixing timelines for tariff petitions and tariff revisions will significantly reduce political influence on electricity tariffs, especially when elections are round the corner.

Apart from the points highlighted above, the amendment might entail a lot more reforms to address current issues in the Power sector, not undermining the Renewable sector, which has been a major focus area of the new government. Grid operations, including Scheduling of Renewable Power might find a mention in the amendment.

It is to be seen how the amendments, when they come into force, impact the sector, as all stakeholders would want to foresee the commercial and operational implications in the longer run.

The related news articles can be read in the links below:

Economic Times

Business Standard

MNRE Finalizes Scheme for Development of Ultra Mega Power Projects

Ministry of New and Renewable Energy (MNRE) on 18th December 2014, has notified the final scheme for the development of Solar Parks and Ultra Mega Solar Power Projects in the country. The scheme aims to add 20 GW of solar energy in next 5 years, with a central financial assistance (CFA) of 4050 Crores. Earlier in the September the ministry had presented draft for the scheme.

The lands for the for development of solar parks has been so far identified in Gujarat, Madhya Pradesh, Telangana, Andhra Pradesh, Karnataka, Uttar Pradesh, Meghalaya, J&K (Leh and Kargil), Punjab and Rajasthan.

Timelines:  The ministry has defined timelines for the execution of the project, which is given in the table below:

The Scheme also states that there will no wheeling charges applicable for the energy generated. If applicable under open Access, it will be very minimal.

The scheme seems very attractive and it will be interesting to see the response of the stake holders and the investors. The target of 100 GW solar capacity by 2022 will get a huge thrust if the scheme kicks off early with little hurdles.

Since domestic manufacturing is a major area of concern in the current Indian Solar sector, this scheme could have addressed it adequately by providing road map for the same, since the new government is constantly pushing its ‘Manufacture in India’ agenda. DCR also finds no mention here. However this scheme is expected to attract huge foreign investments and private equity funds, which may solve this issue to a small extent, but will be focused mainly on projects only.

The MNRE final document can be accessed here

TNERC Hikes Power Tariff In the State

Cost of buying electricity from DISCOMs has become costlier for the Commercial & Industrial consumers in the state of Tamil Nadu. Considering the directives of the Hon’ble APTEL, the National Tariff Policy and in Exercise of the powers vested in it under the Section 62 and Section 64 of the Electricity Act, 2003 (Act) and the Tariff Regulations 2005, TNERC has decided to take up the matter of Determination of ARR and Tariff for 2014-15 by initiating suo-motu proceedings and based on that a public notice was issued by Tamil Nadu Electricity Regulatory Commission (TNERC) on 23/9/2014 eliciting comments &suggestion stakeholders to the proposed suo-motu revision of electricity tariff and transmission tariff.

The commission after considering all the comments & suggestions have revised the electricity tariff by 15% for all the category of consumers for FY 2014-15 effective from 12/12/2014.

 The new tariff applicable to industrial and commercial consumers for HT connections can be seen in the table below:

Group captive arrangement will still remain most viable option for the industrial & commercial consumers looking at the hike in the tariff and R&C measures still in place.

Similarly for LT consumers for all categories there has been tariff hike of 15% as can be seen in the order.

The order can be accessed here.

Contributed by karthik krishnan

Odisha Finalizes Guidelines for Net Metering

Odisha Electricity Regulatory Commission (OERC) through an order has finalized the guidelines for Net Metering systems, including LT connectivity for Government/ PSU owned buildings only.

 A brief summary of the guidelines is given in table below:

The commission is mandated to promote Renewable Energy by providing connectivity with grid and sale of electricity to any person under EA 2003, which is why it has released this guidelines to enable consumers to set up Rooftop systems.

The state of Odisha has fairly good potential for solar power generation with 280-300 days of sunshine in a year and Global Horizontal Irradiance of about 4.5-5.0 kWh/m2/day.

This guidelines does not make consumers eligible for REC’s. This may be due to the fact that solar tariffs are on the decline whereas the state retail tariffs are increasing year-on-year.

The order can be accessed here.

Meghalaya Proposes New RPO Targets

Meghalaya State Electricity Regulatory Commission (MSERC) in a notification dated 03rd December 2014 has proposed draft for RPO Regulation 2014. The regulation will be known as MSERC Renewable Purchase Obligation & its Compliance Regulations, 2014. The regulation will come in force from the date of notification in the official gazette and will remain operative till revised.

The RPO targets proposed are given in the table below:

Previously the commission in 2010 defined targets till 2013, which was only 1% of the total energy consumption.

The new targets are comparatively low, considering that the huge inventory of RECs awaits demand from states which have low Renewable potential. But since Meghalaya being a small state with low energy demand, having even a high RPO target will anyways not have a big impact on demand of RECs, whereas raising the target from 1% to even 5% might have a significant impact on retail tariffs which are relatively on the lower side.

The commission has invited the comments and suggestions from the interested stakeholders by 2nd of January 2015 (I.e. 30 days from the notification of draft).

The draft order can be accessed here.

Our blog on Meghalaya Net Metering Regulation can be rad here.

Odisha Proposes Draft for RPO Regulation, 2014

Odisha Electricity Regulatory Commission (OERC) on 5th December 2014 has notified draft for RPO Regulation 2014. The regulation has been named as Procurement of Energy from Renewable Sources and its Compliance Regulations, 2014.

The targets proposed by OERC for procuring minimum percentage of electricity from Renewable Sources of Energy are given the table below:

Odisha in its previous RPO regulation 2010 defined RPO targets till FY 15-16. The RPO targets for FY 15-16 is same as it was in its previous regulation, but RPO target for Solar has been increased by 0.10%.

The draft also proposes Cross Subsidy exemption for Third Party mode of Open Access. However, no banking facility will be provided for supply (Third Party Sale) from Renewable Energy Sources through Open Access.

Odisha has not been a very active in Renewable Energy space, and has not seen good capacity addition in RE sector till date. On the Solar front it has a potential of 25 GW, but does not fare well in terms of Wind or Biomass potential. Considering the high Non-Solar RPO, it becomes quite obvious that good number of RECs will be purchased by Discoms and other obligated entities. As far as Solar RPO is concerned, there is good scope for Solar IPPs to invest there, as there are good number of big industries in the state to buy solar power under Third Party Mode of Intra State Open Access.

With the current trading price of Solar REC at Rs. 9.3/Unit, it will favor the IPPs under Third Party mode, but in the long run, with the 3rd Amendment of REC Mechanism soon to be finalized, purchasing Solar RECs might become a more economical option, unless there is significant drop in capital cost of Solar projects.

The draft Proposed can be read here.

APTEL directs NLDC to issue RECs from COD

Appellate Tribunal of Electricity (APTEL) in its order dated 28.11.2014, has directed NLDC to issue Renewable Energy Certificates (RECs) from the date of commercial operation (COD).

As per the recent CERC amendment dated 10.07.2013 to REC Regulation, which specifies that the renewable generating plant would be eligible for issuance of RECs from COD or from the date of registration whichever is later. The said amendment is as follows:

“10 (1) After registration, the renewable energy generation plant shall be eligible for issuance of Certificates under these Regulations from the date of commercial operation or from the date of registration of such plant by the Central Agency whichever is later.”

However, the main regulation also quotes:

“7 (1) The eligible entities shall apply to the Central Agency for Certificates within three months after corresponding generation from eligible renewable energy projects.”

The language used is ‘eligible entities’ and not ‘registered entities’. Irrespective of the date of registration, an eligible entity is entitled to apply for RECs within three months from the date of commissioning and generation of electricity as Regulation 7 (1) has not been made subject to Regulation 5 (1) of the REC Regulations which describes only the eligibility and registration for certificates.

A perusal of the above regulation does not show that there is limit to RECs being issued against generation only after the date of registration since the registration process is merely procedural with a view to verify and confirm that the substantive conditions under the REC Regulations have been fulfilled. But, fulfillment is not from the date of registration, but from when the generation of electricity commences.

The APTEL has held that the regulations has to be interpreted and applied in the light of the object to promote the renewable generators and not in a restrictive manner to deprive the generators of any benefit that may be available to them.

As a result, the APTEL has said that Appellants would be entitled to the REC for the electricity generated from COD and the same ought not to be postponed to the generation after completion of the procedural formalities of registration.

The order may only have a small positive impact in number of RECs issued, and issuance of RECs will not be affected by delays in registration process by SNAs.

The order can be accessed here.

Contributed by Venkataramana Mutharasu

Rajasthan Draft Net Metering Regulation

Rajasthan Electricity Regulatory Commission (RERC) has recently notified draft regulation for Net Metering & small solar grid interactive systems. The regulation will come into force from the date of notification in the official Gazette.

The regulation will apply to the distribution licensee and the consumers of the licensee. The consumers in the area of distribution licensee are allowed to install rooftop systems under Net Metering arrangement for their internal use and are allowed to supply surplus energy into the distribution system.

Individual Project Capacities: The rooftop solar system should of minimum 1KWp capacity and should not be more than 1MWp. The maximum capacity for rooftop systems to be installed shall not be more than 80% contract demand of the consumer.

Interconnection with the Grid: The connectivity levels at which the Rooftop PV Solar Power Plants shall be connected with the grid are as specified below:

Energy Accounting and Settlement: The distribution system shall install metering equipment at the point of interconnection. For each billing cycle the distribution licensee shall show quantum of energy injected into the distribution and energy drawn for the system. If the energy injected is more than energy drawn for distribution system then the surplus energy will be carried forward to next month, and if the energy drawn is more than energy injected then in such case the licensee will raise invoice after adjusting previous energy credits.

Applicability of Charges: The Rooftop PV Solar Power Plant under net metering arrangement shall be exempted from banking charges.

Solar RPO and REC Eligibility: The quantum of energy generated from rooftop systems will qualify towards the RPO of the distribution licensee, in case the consumer is not an obligated entity. Considering that the consumer can self-consume or sell to a third party under open access, as per current REC Regulation, a consumer availing Open Access benefits is not eligible for REC. Captive consumers who do not avail Open Access benefits for the entire generation (self-consumption + injection into grid) are eligible for RECs for the entire generation.

The comments and suggestion on the draft ca be submitted on or before December 4, 2014.

The Draft Regulation can be accessed here.

Our earlier blog on Rajasthan Solar tariff can be read here.

Contributed By Dheeraj Babariya

Stricter penalties in Electricity (Amendment) Act: Piyush Goyal (Power Minister)

The Power Ministry will soon come up with the Amendment in the Electricity Act 2003, which will have strict penalties. The proposed amendment is likely to be presented in the parliament during ongoing winter session.

“We’re looking at presenting amendments to the Electricity Act in this session of parliament, for strengthening the penalty provisions manifold in the renewable purchase obligations, to make these more stringent,” said Mr. Piyush Goyal, Minister of Power, in a statement.

He said that the current renewable purchase obligation (RPO) is also being re-looked and added, “Earlier, we had certain set of targets till 2022, which we are bringing forward to 2019, we hope that 15 per cent of the renewable power purchase obligation can be enforced to 2015”.

The concept of RGO will also be introduced in the act, in which companies setting up new power projects will have obligation to generate 10% Renewable Energy component.

The amendment will focus on bringing RE into mainframe, as the REC market has not been performing well and there is little RPO compliance by the obligated entities. The RGO will help the govt. to meet its ambitious target of 100 GW solar power by 2022 with wind capacity addition of 10 GW per year.

The provision for forecasting and scheduling of Renewable Energy is expected in act. Also the concept of ‘Must Run’ and ‘Deemed Generation’ are also expected to be part of this amendment. The idea of ‘Hydro Purchase Obligation’ and the provision of giving Renewable status to large Hydro projects can also be included.

It will be interesting to see how this amendment affects the market performance, before the proposed Renewable Energy Act is passed early next year.

Media Articles:

Business Standard

The Economic Times

Indian Express

APTEL directs KERC to revise Wind Tariff in Karnataka

The Appellate Tribunal for Electricity (APTEL) has found calculation errors in the tariff defined by Karnataka Electricity Regulatory Commission (KERC) for Wind generators, in its order dated 10.10.2013.

In a hearing of petition filed Indian Wind Power Association & Indian Wind Turbine Manufacturer’s Association, the tribunal has directed the state commission to re-determine the levellized tariff for useful life of the project.

The Appellants had earlier raised some issues regarding the determination of the tariff by KERC, and requested before the tribunal to direct the state commission to re-determine the tariff.

After hearing both the parties and their respondents and analyzing the facts, the tribunal found that the state commission has made some errors during computation of the tariff, and has thus directed the state commission to re-determine the wind tariff in the state within 3 months of the date of this order.

In our analysis the re-determination of the tariff will result in the little higher tariff compared to the current tariff of Rs. 4.20/unit.

The order can be accessed here.

Our Previous blog post on KERC draft for RE Tariff can be read here.

Contributed by Dheeraj Babariya

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