REC Trade Results May 2015 – A Significant jump after Supreme Court judgment

We are pleased to share the Result of REC trading for the month of April-15.

In May’s trading session, 256,579 Non Solar and 83,189 Solar REC’s were traded through Power Exchange (a total of 339,768 REC’s), which was more than 4 times the traded volume in April.

The significant jump appears to a direct result of the Supreme Court judgment. The SC gave its judgment upholding the applicability of RPO on open access and captive consumers. The judgment is expected to have far-reaching impact as stay on RPO in many states will become redundant. It is also expected that SERC will take a more stringent approach to RPO enforcement.

 Analysis of Trading:-

 Non Solar - Total of 2.5 Lakh REC’s were cleared in this trading session. IEX and PXIL had a clearing ratio of 3.6% and 0.4%. Non Solar REC’s traded were approx.3.5 time’s higher w.r.t previous month.

Solar - REC’s redeemed this month were 83 Thousand, which were an 8-fold increase in number w.r.t. previous month. The clearing ratio was 5.51% and 0.89% in IEX and PXIL respectively. Demand for solar REC’s significantly improved this month.

The REC trade results in the FY 2014-15 is summarized below for your reference.

Non-Solar

Solar

Media Coverage – The Hindu Business Line

BY: Team REConnect

APTEL Directs DERC to adjust the PPAC (Hike in Tariff)

The Appellate Tribunal for Electricity (APTEL) in its judgment dated 25th May 2015 has directed the DERC (Delhi Electricity Regulatory Commission) to determine the Power Purchase Adjustment Cost (PPAC) for the 3rd and 4th quarter of the previous financial year (FY 14-15).

The Judgement came after Tata Power Delhi Distribution Ltd. Filed a petition in the tribunal requesting for directing the DERC to implement the PPAC for 3rd and 4th quarter of Financial Year 2014-15 immediately.

The tribunal after hearing both the parties, in its summary stated that:

“In the hierarchy of the Courts, there is a committing of discipline and such discipline should be maintained by all, otherwise that would lead to chaos in the whole Country particularly, in the Power Sector if such trend of slackness or arbitrariness is allowed to the State Commission like DERC in the present case”.

And the judgment:  

“We direct the Delhi Commission to determine the PPAC for the above said 3rd and 4th quarter within three weeks from today otherwise face the consequences and action will be taken by this Tribunal”.

This decision of APTEL has come as a relief for the distribution licensees, who have been facing financial crunches and revenue gaps. This move will result in increase in tariff hike in the state. The capital is likely to see tariff hike of 5% to 20%.

The order can be reached here.

Related article on Indian Express and NDTV

MPERC Finalizes RPO Targets for FY 15-16

The Madhya Pradesh Electricity Regulatory Commission (MPERC) on 08th May 2015 has finalized new Renewable Purchase Obligation (RPO) target for FY 15-16. The notified amendment finalizes RPO target for FY 15-16, the details are in the table below:

The MPERC in its previous order dated 19th November 2010, had defined targets till FY 14-15. In the new order the targets hasn’t been increased I.e. it is same as it was for the last financial year FY 14-15. The graph below shows the RPO targets defined by MPERC till date.

The commission could have defined higher targets, keeping in mind that some of the neighbouring states like Rajasthan, Gujarat and Maharashtra has defined higher solar and wind RPO targets. Also the state is having good potential for solar and wind energy generation and it is expected that the state might get some of big solar projects under Mega Solar Project scheme of central government.

The final gazette notification can be accessed here.

PSERC Proposes RE Tariff for FY 15-16

The Punjab Regulatory Commission (PSERC) has recently proposed the Renewable Energy Tariff for FY 15-16. The commission through a separate Public Notice has invited comments and suggestions on the proposed Staff Paper. The comments and suggestions can be submitted by 15th June, 2015.

The details of the tariff proposed by the commission are given in the table below:

A graph depicted below shows the tariffs determined by the PSERC over the years.

The tariffs determined by the PSERC over the years have been in line with the tariff determined  CERC. The PSERC has followed the same trend in changing the tariff (% Change in tariff) for different Renewable Energy technologies as carried out by CERC. So it is expected that the PSERC RE tariff for FY 15-16, might be determined in line with the CERC RE tariff. .

The more details on draft RE Tariff can be read here.

PSERC (Punjab) Finalizes Solar Rooftop (Net Metering) Regulation

The Punjab Electricity Regulatory Commission (PSERC) has recently (on 7th May 2015) finalized the Net Metering Regulation for Grid Interactive Solar Rooftop Systems. The regulation will allow electricity consumers of the state to generate solar energy and to consume such generate energy for their internal use and to feed the remaining surplus solar energy into the distribution system. The regulation will come in force from the date of publication of the same in official gazette.

The main features of the regulation are given in the points below:

  • The solar rooftop system to be installed can be self owned system or a third party owned system.
  • The solar rooftop systems shall be of Min. 1kWp capacity and Max. 1Mwp capacity with or without battery backup.
  •  The Discom shall offer the provision of Net Metering to the consumer who intends to install rooftop systems on first come first serve basis.
  •  A maximum cumulative capacity at a particular distribution transformer shall not exceed 30% of the rated capacity of the distribution transformer.
  • The capacity of an individual rooftop PV system shall not exceed 80% of the sanctioned load of the consumer.
  • The energy accounting and settlement will be done based on the reading of the bidirectional meters.
  • The cost of installation of the bidirectional meters will be borne by the consumer and shall be maintained and installed by distribution licensee.
  • Any energy credits of a consumer from previous months will be carried forward to next billing period and will be set to zero after the settlement period.
  • The electricity generated from solar rooftop systems shall not be more than 90% of the total energy consumption of any consumer in a settlement period. No payment shall be made by the distribution licensee, beyond this limit.
  • The quantum of energy consumed from the rooftop system will be considered towards the Renewable Purchase Obligation (RPO) of Distribution licensee if the consumer is not an obligated entity.
  • The rooftop systems shall be exempted from payment of wheeling, banking and cross subsidy surcharge applicable under PSERC (Terms & Conditions for Intra-State Open Access) Regulations, 2011, as amended from time to time.
  • The eligibility for availing benefits of REC mechanism shall be as per CERC REC Regulation 2010.

PSERC earlier notified its draft regulation and invited comments from stake holders and interested parties, following that the commission has finalized the regulation. The regulation seems to be a good sign for development of solar energy in the state as the PEDA (Punjab Energy Development Agency) has already announced its policy for rooftop solar energy systems.

The regulation can be accessed here.

Jharkhand Notifies Draft Solar Policy 2015

The Government of Jharkhand has recently notified draft for new solar policy. The new policy will be known as the Jharkhand State Solar Power Policy 2015. The new Policy will be in operation for five (5) years from the date of issuance and will remain operational till modified or superseded by a new policy.

Objectives of the Policy:

The Policy targets to achieve 2500 MW of solar energy by 2020 and with an objective of promoting local manufacturing facilities and generating employment in the state.

Minimum Target: The minimum size of the solar PV power plant at single location shall be 1 MW.  The targets of the policy are elaborated below –

Implementation Plan

1)      Utility Scale Projects:

  • Development of Solar Power Plants for Sale of Electricity to the Distribution Licensee.
  • Generations of Solar Power for Sale of Electricity to Third party or through Open Access.
  • Development of Solar Parks.
  • Development of Solar Power Plants under REC Mechanism.
  • Development of Solar Power Plants on Canals.
  • Development of Solar Power Plants under the schemes announced by Government of India.

 2)      Rooftop Solar Photovoltaic Power Plants Connected with Electricity System:

  •  Development of Solar Power plants for sale of electricity to the distribution Licensee.
  • Generation and sale of electricity to a person/entity other than distribution licensee via Open Access mode.
  • Generation, Captive Consumption and injection of surplus electricity under Net Energy Metering Mechanism.

3)      Decentralized & Off-Grid Solar ApplicationsThe Government will also promote decentralized and off grid solar applications, to meet the requirements of electricity and thermal energy, as per the guidelines issued by Ministry of New and Renewable Energy, Govt. of India.

Incentives Offered:

  • Exemption from the payment of Electricity Duty.
  • Deemed Industry Status will provided.
  • Pollution Clearance.
  • Open Access will be allowed.
  • Exemption from payment of Conversion Charges.
  • Exemption from the payment of VAT & Entry Tax.
  • Exemption from wheeling Charges.
  • Exemption from Distribution Losses.
  • Exemption from payment of Cross Subsidy Surcharge.
  • Banking for 100% of energy during all 12 months of the year.
  • Third Party Sale within or outside the State will be allowed.
  • Must run status for Solar Power Projects.
  • Renewable Energy Certificate (REC).
  • Deemed Public Private Partnership (PPP) Status..
  • Non Agriculture Status for the land where Solar Power Projects will be accorded.

Solar Purchase Obligation (SPO):

1) Solar Procurement Obligation (SPO) will be mandatory for commercial consumers with LT Industrial connection with more than 50 kVa connected load and for all HT & EHT consumers. All such consumers have to procure 4% of their power from solar source.

2) All new domestic buildings having floor area equal to or greater than 3000 sft will have at least 100 kw Solar PV system. In case of Housing Societies, 5% of energy usage should be from solar for common amenities.

3) In the potential categories to be notified like star hotels, hospitals, residential complexes with more than 50 kVA total connected load the use of solar water heating system shall be made mandatory.

Apart from all this the government also intends to promote solar manufacturing and R&D facilities in the state. Incentives to such manufacturing facilities will be provided separately. JREDA will act as Nodal Agency for all projects.

Overall the policy offers good number of incentives to the project developer, in terms of tax relaxations, must run status, exemptions from various charges etc. The policy proposes to increases the solar purchase obligation (SPO) to 4% for the consumers, which is 1% for now (as per JERC orders 2012), it also puts obligation for consumers to use the decentralized solar applications, which appears to be a good approach.

It looks promising and offers a fresh start for the state, which hasn’t seen much of the capacity addition in the solar energy sector. The state is having a total potential of more than 18 GW of solar energy. Out of this potential a target of 2.5GW can be achievable, given that the state government works positively towards it.

The Draft Policy can be accessed here.

Rajasthan Finalizes Tariff for Biomass Projects

Rajasthan Electricity Regulatory commission (RERC) in its order dated 7th May 2015, has finalized the tariff for biomass projects in the state. The regulation will come in force from 1st April 2015 and will remain in force for a period of four (4) years.

Tariff for Biomass power plants, for which Power Purchase Agreements (PPA) have been executed under GoR Policy of 1999 and commissioned before 30.09.2008 will be as under:

The commission has also finalized the capital costs for the technology specific projects. For Biomass Gasifier based power plants the capital cost has been fixed at Rs. 457.24 lakh/MW, and for Biogas based power projects it has been determined at Rs. 883.62Lakh/MW.

Other charges payable by the generators:

kVArh charges: Net kVArh drawal by generating plants from the Grid will be billed at 12.50 paise/kVArh w.e.f 01.04.2015 escalated annually at 0.50 paise/kVArh, unless otherwise revised by the Commission by Order.

Transmission & wheeling charges: For third party sale or captive use within or outside the state the wheeling and transmission charges will be recovered as per orders of the commission.

Banking: Banking of energy is allowed at consumer end for only captive consumption within the state. The period of banking will be monthly basis and banking charges at 2% of banked energy would be payable.

The commission order can be accessed here.

Analysis of Supreme Court Judgment on Applicability of Renewable Purchase Obligations

On May 13, 2015 the Supreme Court pronounced a landmark judgment on the applicability of Renewable Purchase Obligations (RPO) regulations. The case in question is Hindustan Zinc vs Rajasthan Electricity Regulatory Commission (RERC).

Background

In August 2012, the Rajasthan High Court had dismissed an appeal by Hindustan Zinc Ltd., Ambuja Cements Ltd., Grasim Industries Ltd. and 14 other companies that challenged RPO regulations enacted by the state regulator (Rajasthan Electricity Regulatory Commission; RERC).

The key points contested by captive (CPP) and open access (OA) users in the petition were:

  • RERC did not have the authority to pass the order of RPO and impose surcharge (penalty) as CPP and OA were completely de-licensed activities under the Electricity Act 2003 (EA 2003)
  • EA 2003 only allows RPO on the ‘total consumption in the area of the distribution licensee’ and therefore intends to apply RPO on distribution licensees only

The High Court rejected the petition stating:

  • The word ‘total consumption’ has been used in the EA 2003, and should be considered as total consumption in the area of distribution licensee in all modes. Total consumption has to be seen by consumers of distribution licensee, captive power plants and on supply through distribution licensee. It cannot be inferred by mention of area of distribution licensee that only consumers of the distribution licensee are included.
  • The objective behind imposition of RE obligation is in the greater public interest. The constitution casts duty on the Regulatory Commission to protect and improve the natural environment. This duty can be imposed on CPP and OA as well.

The above order of the Rajasthan High Court was challenged in the Supreme Court.

 

Order of the Supreme Court

In its order, the Supreme court dismissed the appeal of the petitioners, and upheld the RPO regulations made by RERC.

The court stated several important points in its judgment:

  • Imposing RPO is desirable in the larger public interest. The court observed that:

“…The Right to live with healthy life guaranteed under Article 21 of the Constitution of India, it has also been interpreted by this Court. It includes the Right to live in a pollution free environment and laid down the law in a catena of cases…”

and

“The impugned Regulations fall within the four corners of the Act of 2003 as well as Electricity Policy, 2005. The object of imposing RE Obligation is protection of environment and preventing pollution by utilising Renewable Energy Sources as much as possible in larger public interest.”

And further:

“The Coal dominates the Thermal Power Generation which results in Green House Gases resulting in global warming. The said facts were brought to our notice that the same would certainly justify the case of the RERC in framing the impugned Regulation to achieve the object of the Act and the Constitution by imposing RE obligation on the captive gencos.”

  • RPO applicability on captive and open access consumers is well within the ambit of the Electricity Act 2003.

“The High Court has considered the submissions of the appellants and has rightly rejected the same on the ground that the RE obligation imposed on the captive gencos under the impugned Regulations is neither ultra vires nor violative of the provisions of the Act of 2003 and cannot in any manner be regarded as a restriction on the fundamental rights guaranteed to the appellants under the Constitution.”

  • Cost of fulfilling the obligation cannot be held above the larger public interest.

“The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry….”

As a result of the above findings, the court dismissed the appeal.

“Upon consideration of the rival submissions by the well-reasoned order, the High Court has rightly upheld the validity of the impugned Regulation and we do not find any reason to interfere with the impugned judgment. All the appeals are dismissed as the same are devoid of merit.”

Implications of the order

This order is likely to have far-reaching implications on the enforcement of RPO regulations.

  • Stay by HC in various states may become redundant: Till date, the enforcement of RPO regulations has been lax due to various reasons. One of the reasons has been the stay granted by various High Courts like in the case of Gujarat (recently vacated), MP and Tamil Nadu, among others. With the Supreme Court now ruling in favour of imposition of RPO, the existing stay may become redundant.
  • Enable stronger enforcement: Further, the order is likely to provide support to the state electricity regulators to impose RPO regulations more forcefully and effectively.

Media coverage: Bloomberg & Business Standard.

For recent APTEL order on RPO click here.

Tripura SERC Proposes New RPO Targets

The Tripura Electricity Regulatory Commission (TSERC) in its recent notification has proposed new targets for Renewable Purchase Obligation (RPO). The commission in its notification dated 18th July 2014 also proposed draft for RPO targets.

The summary of the new targets proposed is given below:

The graphs below shows the RPO targets being proposed and finalized by the commission in its previous orders and the comparison of RPO targets with the targets defined under national tariff policy:

The TERC in its new proposed targets has significantly increased the RPO targets and are almost in line with the targets defined under National Tariff Policy.

The commission has proposed significantly higher targets for FY 15-16 onwards, but it is to be seen how RPO is enforced in the state.

The order can be accessed here.

Haryana Finalizes Retail Tariff for FY 15-16

The Haryana Electricity Regulatory Commission (HERC) on May 7th, 2015 has finalized the retail supply tariff applicable for FY 15-16.

The summary of the Industrial tariffs is given in the graph below:

Commercial Consumers tariff defined for FY 15-16 is Rs. 6.3/kVAh compared to Rs. 5.71/kVAh, a rise of 9.4% which is significant. And the LT industrial tariff for FY 15-16 has been increase by 6-7% compared to previous year.

Wheeling Charges:  The wheeling charges have been fixed at Rs. 0.85 per kWh.

Cross Subsidy Surcharges:The CSS for HT industrial consumers will be Rs. 0.93 per unit, and for Non-domestic HT consumers Rs. 1.46 per unit. A graph on the CSS defined by the commission over the years is below:

The CSS for industrial consumers saw a decrease of almost 54% compared to previous year and the same of Nondomestic HT consumer has been increased by 73%. This increase in CSS for Non-domestic consumer will make open access transaction costly while for Industrial consumers this decrease in CSS will make open access and exchange transactions more viable.

The order can be accessed here.

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