Three States to Kick Start Power Sector Reforms

A joint statement was released on 21st September 2015, by Goa, Uttarakhand and Meghalaya where these states have signed a joint statement of reforms with the Central Government in order to enable 24×7 power supplies to consumers.

The joint statement highlighted the five-point agenda for these states:

  • An increase in power generation from local energy sources
  • An improvement in the inter-state transmission network,
  • Enhancement of the use of renewable energy and
  • Enhancement of the use of energy-efficient measures.
  • Strong communication, information technology and monitoring division.

Fulfilling these agendas will improvise the quality of life of the consumers and also promote economic developments overall.

The above update has been taken from Business Standard’s article published on 22nd September, 2015 which can be accessed here.

MERC Draft Order on Distribution Open Access Regulations, 2015

MERC (Maharashtra Electricity regulatory Commission) came up with its draft order on 16th September, 2015, on new regulations for distribution open access in the state of Maharashtra. The key changes were:

  • Reduction of Eligibility limit from 1MW to 0.5mw
  • Allowing sourcing of power from multiple sources
  • Allowing sourcing of power from power exchanges.

A comparative analysis, with the previous Open Access Regulation, 2014 is given below:

  • The open access consumers shall pay wheeling Charges, Cross Subsidy Surcharge and additional Surcharge as specified by the state commission in relevant orders.
  • Open Access Customer having a load of 5 MW or above shall pay Reactive Energy Charges and also shall pay Standby charges for drawl of power by open access consumer.

The Honorable commission has invited comments and suggestions from various stakeholders on the same, to be submitted till 8th October 2015.

In our opinion, MERC has proposed a progressive open access regulation. In the recent past, consumers in Maharashtra have faced various issues and problems of availing open access (for example, allowing open access only from one source and reduction in contract demand as a result of open access). The draft regulations seeks to do-away with such restrictive practices.

Further, lowering the limit of open access eligibility to 0.5MW and allowing sourcing power exchanges will help consumers and deepen the market.

Clear banking provisions and wider eligibility will also be beneficial for renewable energy projects  and is likely to result in higher development of RE projects as Maharashtra is a RE resource rich state.

 More details on the Regulation can be accessed here.

The previous MERC Open Access Regulation 2014 can be accessed here.

 

OERC Order on RPO Compliance

The Green Energy Association and Orissa Renewable Energy Development Agency had filed a petition in the matter of non-compliance of RPO by obligated entities in OERC. The respondents GRIDCO and NALCO quoted the same reason of non-availability of RECs in the market for failure in meeting the obligation, even though the RECs were available at floor prices.

Green Energy Association submitted that imposition of RPO should not be relaxed in any manner for any of the obligated entities. It has submitted that the provision in the Regulation like power to relax and power to remove difficulties should be exercised judiciously only on exceptional circumstances as per the law and should not be used routinely which would otherwise defeat the object and purpose of the Regulation. Non-availability of REC should be a pre-condition to carry forward the RPO of the OERC (Renewable Purchase Obligation and its compliance) Regulations, 2010. They requested the Commission, not to consider fossil fuel based Co-generation plant under the category of renewable energy and to consider non-fossil fuel based topping up cycle Co-gen plants under renewable energy category.

After reviewing the submitted documents from both the petitioner and the respondents the Commission gave the following order:

  • The reasons advanced by parties for non-fulfillment of RPO obligation are unjustified and Commission is not inclined to grant any exception on this matter.
  • The obligated entities are allowed to carryover their renewable and co-generation purchase obligation upto 31.03.2015 till 31.08.2016. If they do not purchase the obligated quantity of power, they can purchase REC at least 5% of the obligation per month upto 31.03.2015 from August, 2015 on wards and must comply the arrear obligation in full by 31.08.2016. No further extension of time shall be granted to carry forward the renewable purchase obligation in any circumstance.
  • All the obligated entities shall submit compliance report quarterly to OREDA within the above time frame. OREDA shall also submit the quarterly compliance report to the Commission after due scrutiny.
  • All obligated entities mentioned in the RPO Regulations, 2010 shall comply with the said Regulations henceforth.

This order superseded all other previous orders issued by the Commission in this regard.

The reason for non- compliance of RPO by the respondents is found inappropriate by the commission, because as per the REC inventory there are 2598847 Solar RECs available in the market as of now.

The table below gives the solar RPO targets for Orissa from year 2012-13 to 2015-16

It is expected that in line with the order, GRIDCO and other obligated entities will comply with the RPO targets, and thus we expect a surge in demand for Solar RECs in the coming months.

The Commission’s order can be accessed here.

The Commission’s order can be accessed here.

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