BERC penalizes state DISCOMs over unfulfillment of RPO obligations

In a recent petition filed by BSPHCL on behalf of NBPDCL & SBPDCL, seeking approval for deviation to fulfill the obligation of RPO for FY 2018-19, the commission has rejected the plea and has not allowed the discoms to carry forward the RPO obligation for FY 18-19 to FY 19-20. The reasoning for the above-stated decision is as below:

  • In the petition, BSPHCL has submitted that Bihar is a state with a lack of renewable energy projects & is dependent upon Central government schemes to fulfill its RPO obligations.
  • Further, the petitioner stated that since the price discovery on the power exchanges has been much higher than the floor price attributed to an increase in demand for REC by discoms by captive & open access consumers.
  • The commission approved the fact that they have purchased non-solar as well as solar RECs and have fully complied non-solar  RPOs whereas they have partially complied solar RPO due to higher clearing price than the quoted price.

Finally, after listening to all the arguments, the commission stated that it was evident that solar REC was available in the exchange at floor price right from April 2018 to Nov. 2018 but no attempt was made to purchase RECs at the end of FY18 when the REC prices soared high. Hence, the commission has rejected the petitioner’s plea to carry forward the RPO obligation and get penalized as per clause 9.1 of the latest BERC RPO regulations.

Haryana announces its final DSM regulations for wind and solar, 2019

Haryana Electricty Regulatory Commission announced the DSM regulations for wind and solar, 2019 along with the statement of reasons recently post the draft discussion paper in 2018. The summary of the regulations is as below:

Title: Haryana Electricity Regulatory Commission (Forecasting, Scheduling and Deviation Settlement and related matters for Solar and Wind Generation) Regulations, 2019.

Applicability:

  • From the date of publication in the official gazette.
  • Levy and collection of DSM Charges shall commence after six months from the date of publication in the official gazette.

Regulation to be applicable on:

Regulations will apply to all Wind and Solar Energy Generators in Haryana connected to a particular Pooling Sub-Station, or that of an individual Generator connected to some other Sub-Station not be less than 1 MW to the Intra-State Transmission /Distribution System, including those connected through Pooling Sub-Stations, and using the power generated for self-consumption or sale within or outside the State  combined installed capacity of the Solar or Wind Generators.

Deviation Accounting: The deviation accounting will be carried out based on the Available

Capacity:- 

Point of forecasting: Pooling sub-stations and /or Intra-state transmission/distribution system.

Aggregation: No provision of Aggregation, unlike AP and Karnataka where it is allowed.

Role of QCA:

  • Meter reading and data collection and its communication, and coordination with the Distribution Licensees, the SLDC and other agencies
  • De-pooling of amount among other generators
  • Settlement of the Deviation Charges specified in these Regulations with the SLDC on behalf of the Generators.

Revisions:

  • 16 revisions to be submitted for both wind and solar generators starting from 0.00 hours of the day.
  • All the revisions are effective from the 4th time-block

Key points:

  • The Deviation Charges shall be paid within ten days from the issuance of the invoice along with a statement of account by the SLDC, failing which an interest of 0.4% per day for each day shall be levied for the period of delay.
  • In case of any curtailment communicated by the SLDC due to line maintenance or other reasons in certain time blocks of a day, the QCA shall be responsible for curtailing the generation at the site and revising the Schedule accordingly, failing which the SLDC shall revise the Schedule as required.

Inter- & Intra-state deviation settlement transactions:

  • Deviations in respect of Inter-State and Intra-State transactions shall be accounted for separately at each Pooling Sub-Station.
  • Inter-State transactions at a Pooling Sub-Station shall be permitted only if the concerned Generator is connected through a separate feeder.
  • The QCA will submit a separate schedule on behalf of the generator for its energy generation to the SLDC and the concerned RLDC.
  • The SLDC will prepare the deviation settlement account for such generator on the basis of measurement of the deviation in the energy injected and its impact at the state periphery.

Deviation Charges for Intra-state sale of power

Deviation Charges for Inter-state sale of power

Deviation charges for under- or over-injection for intra-state transmission and selling/consuming power outside Haryana

Deviation Charges in case of under-injection

Deviation Charges in case of over-injection

*The fixed rate is the PPA rate determined by the commission, in case of multiple PPAs, the fixed rate shall be the weighted average of the PPA rates.

The tentative date for the DSM charges to be levied is supposed to be six months i.e. 1st December 2019, after the regulations get notified in the Gazette.

CERC issues draft Deviation Settlement Mechanism and related matters – fifth amendment, regulations, 2019

CERC recently notified draft DSM & related matters amendments after MSEDCL, MPPMCL, & WBSEDCL filed a petition before the Delhi High Court challenging the legality & validity of certain provisions on the DSM 4th amendments, regulations 2018 which were notified in November 2018 & came into effect from 1st January 2019.

According to the petition, there were issues pertaining to the operation of clauses 7(1), 7(10) & 7(11a). Post-hearing of the petitions & examining it, the Commission proposed these amendments, the highlights of which are as below:

Issue: Sign change norms in case of sustained deviation and imposition of additional surcharge for such violation under Regulation 7(10) and 7(11)(a)

The commission in the DSM (4th amendment) regulations, 2018, provided for 6th time blocks for change of sign in case of sustained deviation in one direction. Similarly, a new proviso was added to regulation 7(10), which specifies the additional surcharges of 20% of the daily base DSM payable/receivable to be levied for each violation of sign change norms.

Post receiving comments from various stakeholders, the commission suggests creating a framework seeking to discourage the entities from leaning on the grid to meet their demand-supply gap.

Amendment – Regulation 7 (10): “In the event of sustained deviation from the schedule in one direction (positive or negative) by any regional entity (buyer or seller), such entity shall correct its position in the manner as specified under clauses (a) and (b) of this Regulation.”

(a) Up to 31.03.2020, if the sustained deviation from schedule continues for 12 time blocks, the regional entity (buyer or seller), shall correct its position by making the sign of its deviation from schedule changed or by remaining in the range of +/- 10 MW with reference to its schedule, at least once, latest by13th time block.

Provided that each violation of the requirement under this clause shall attract an additional charge of 10% on the time block DSM payable/receivable as the case may be.

(b) From 01.04.2020, if the sustained deviation from schedule continues for 6 time blocks, the regional entity (buyer or seller), shall correct its position, by making the sign of its deviation from schedule changed or by remaining in the range of +/- 10 MW with reference to its schedule, at least once, latest by 7th time block.

In case of the above violations occur additional charges will be applied as below:

No. of violations in a day Additional Charge Payable
From first to fifth violation For each violation, an additional charge @ 3% of daily base DSM payable / receivable
From sixth to tenth violation For each violation, an additional charge @ 5% of daily base DSM payable / receivable
From eleventh violation onwards For each violation, an additional charge @ 10% of daily base DSM payable / receivable

Counting of the number of sign changes violations under clauses stated above will start afresh at 00.00 Hrs. for each day.

These charges will not be applicable to:

  • Renewable energy generators which are regional entities
  • Run of river projects without pondage
  • Any infirm injection of power by a generating station prior to CoD of a unit during testing and commissioning activities, in accordance with the Connectivity Regulations.
  • Any drawal of power by a generating station for the start-up activities of a unit.
  • Any inter-regional deviations.
  • A forced outage of a generating station in case of collective transactions on Power Exchanges.

Amendment: In order to implement these amendments two new definitions have been included in Regulation 2, clause (1) sub-clause (gb) & (qa):

“(gb) “Daily Base DSM” means the sum of charges for deviations for all time blocks in a day payable or receivable as the case may be, excluding the additional charges under Regulation 7”.

“(qa) “Time Block DSM” means the charge for deviation for the specific time block in a day payable or receivable as the case may be, excluding the additional charges under Regulation 7”

Issue 2: Daily Deviation limit and the additional charge for its violation under Regulation 7(1)

The Commission has specified through the 4th amendment to DSM Regulations a daily volume limit of 3% of the total schedule for the drawee entity and 1% for the generators for deviation from the schedule in energy terms during a day. In addition to this, an additional charge of 20% of the daily base DSM payable/receivable for such violation was prescribed.

The commission is of the view, that countries like Europe & the United States of America have a very narrow range in order to ensure quality power supply to consumers and maintain good infrastructure. Similarly, it is necessary on the part of utilities to comply with the policy instructions of the government so as to secure adequate generation resources in different time zones to meet demand, rather than simply relying on the grid providers of reserves.

However, since the timeline of this implementation is not immediate, Regulation 7 (1) is deleted.

“Provided also that from a date not earlier than one year as may be notified by the Commission, the total deviation from schedule in energy terms during a day shall not be in excess of 3% of the total schedule for the drawee entities and 1% for the generators and additional charge of 20% of the daily base DSM payable/receivable shall be applicable in case of said violation.”

Issue: Clarification on the Area Clearing Price (ACP) in case of inter-regional and international exchange and clarification with respect to the applicability of cap rate for various types of fuel plants.

The Commission is of the view that DSM charges for an entity falling in different bid areas should be computed based on the daily average ACP of the bid area in which the entity has the largest proportion of its demand. Similarly, the charges for inter-regional deviation and cross-border and for deviation in respect of cross-border transactions should be computed on the basis of the unconstrained market clearing price in Day-Ahead Market.

Also, the Cap rate for the charges for deviation for the generating stations, irrespective of the fuel type and whether such generating stations are regulated by the Commission or not, will not exceed 303.04 Paise/kWh. The Commission has decided to continue with the already available reference of 303.04 Paise/kWh.

Further, it is proposed to discourage over-injection during high grid frequency, a generating station should not be paid for over-injection if the frequency is between 50.05 Hz and 50.10 Hz, and any over-injection when the grid frequency is 50.10 Hz and above, will attract the payment of DSM charges equivalent to frequency at 50 Hz or the cap rate of 303.04 Paise/kWh whichever is lower.

The public hearing for the draft regulation amendment is scheduled to take place on 22nd May 2019.

 

Indian state DISCOMs debts lower to pre-UDAY level – CRISIL

CRISIL, a global analytics company has come out with a report which is an analysis on DISCOMs of 15 states (Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Andhra Pradesh) being some. According to the report the aggregate external debt of these state-owned discoms is set to increase to pre-Ujwal level Discom Assurance Yojana (UDAY) levels of Rs. 2.6 Lakh crores by the end of this financial year.

Since most states have a limited room for tax reduction, any type of continuous support to their discoms might get difficult. As a result, the discoms will have to become commercially viable through well-thought tariff hikes and a material reduction in AT & C losses. As per the report, these states account for approximately 85% of the losses currently.

As per the Memorandum of Understanding (MoU) signed by the states under the UDAY scheme in FY 2016, the discoms were to initiate structural reforms in the form of AT& C losses reduction by 900 basis points (bps) to approximately 15% in FY 2019. In turn, the state governments were to let go off three to four months of discom debt further reducing their interest cost burden.

Since the initiation of the scheme, the discoms enjoyed the benefit of debt reduction, but the structural reforms happened at 400 bps till December 2018 from pre-UDAY levels and average tariff increase happened ~3% per annum.

Any further improvement in the operations may be difficult for the discoms since now the focus is on new rural connections which comes with an inadequate tariff hike, in turn, increasing the losses.

Further, the funding needs for budgeted capital expenditure, and external debt of the discoms would reach to ~ 2.6 Lakh crores by the end of FY 2020.

Currently out of the 15 states, nine states are already violating the Fiscal Responsibility and Budget Management Act Bound of 25% debt and gross state product ratio. This makes the structural reforms of discoms a critical need in the form of cost-effective tariffs and better infrastructure for the reduction in AT&C losses.

Gujarat Discoms Tariff, wheeling & distribution charges & losses for FY 19-20 announced

The distribution companies of Gujarat along with the state-owned Generation & transmission utilities filed petitions to determine the tariffs, wheeling charges & distribution losses for the FY 2019-2020. The Key highlights from the order are as follow:

  • There has been no increase in the power tariff for the consumers of State-owned Discoms and Torrent Power Limited (Ahmedabad-Gandhinagar and Surat area)
  • The number of slabs in Residential Tariff is reduced from 5 to 4 so as to simplify the present structure.

The Slab of 100- 200 units and 200-250 units are merged into one slab of 100-250 units. Due to this, there will be a reduction of 10 Paise/unit in energy charge for the consumption falling under the earlier slab of 200-250 units; This change also carried out for the consumers of Torrent Power Limited- Surat area along with all the other discoms in Gujarat.

  • The benefit of Optional Demand Based Tariff extended to small consumers up to 6 kW of contract demand.

Wheeling charges, losses, distribution losses & Cross Subsidy Surcharges

The wheeling charges for four discoms (UGVCL, PGVCL, DGCVL, MGVCL) for FY 19-20 applicable to GENCOs or captive power plants permitted for Open Access under the electricity act, 2003 are as follows:

Distribution losses for HT & LT network are 10% & 5.05% respectively. In case the injection is at 11kV & drawal is at LT level, in that case, loss of 12.75% is to be applied at the 11kV injection network.

*Tariff Policy, 2016 provides that the surcharge shall not exceed 20% of the tariff applicable to the category of the consumers seeking Open Access.

Charges for Torrent (Ahmedabad & Surat)

 

REC trade result – April 2019

The April trade session saw a significant decrease in traded volume, most likely due to this being the first trading session of FY 2019-20. However, since demand continues to exceed supply, prices remained firm.

Non-Solar: This session the RECs were traded at the price of INR 1500 at PXIL (50% above the floor price) and INR 1300 at IEX (30% above the floor price). A total of 2,85,924 RECs were traded in this session.

Solar: Total number of solar RECs traded in this session was 82,978 RECs traded at Rs 1,800 at PXIL (80% above the floor price) and at Rs 2000 at IEX (100% above the floor price).

The overall trade volume (3,68,902 RECs) decreased by almost 68% from the last months’ trade volume (11,77,761 RECs).

 

CERC notifies sixth amendment of inter-state sharing regulations of transmission charges & losses, 2010

In a recent notification issued by CERC on the (Sharing of inter-State Transmission Charges and Losses) amendments have been announced. These are the sixth amendment in the regulations and will come into effect in retrospection from 31.12.2018.  The below-stated amendments have come been notified in retrospection and will only be applicable to projects whose generation capacity has been declared under the stated commercial operation period.

The amendments in the regulations are as follow:

  • In regulation (7) of the principal regulations subclass (h) & subclass (z) the date “3.12.2019” will be substituted with “12.2.2018.
  • A new sub-clause (aa) will be included in Clause (1) of Regulation 7 of Principal Regulations as under:-  “ No transmission charges and losses for the use of ISTS network shall be payable for the generation based on solar and wind power resources for a period of 25 years from the date of commercial operation of such generation projects if they fulfill the following conditions.”

Provided such generation capacity has to be awarded projects via a competitive bidding process & should have been declared under commercial operations between 13.2.2018 till 31.3.2022.

Also, Power Purchase Agreement(s) should have been executed for sale of such generation capacity to all entities including Distribution Companies for compliance of their renewable purchase obligations.”

RE companies move to the high court requesting exemption from GST on RECs

Renewable Power companies have moved to the Delhi High Court requesting an exemption from Goods & Service Tax on the REC certificates. Currently, there is a GST rate of 12% applied to Renewable Energy Certificates. The Delhi Court had issued notices on Tuesday to the center, the GST council & the Central Board of Indirect Taxes and Customs in this regard.

According to the Counsel of the petitioner companies securities are defined neither as goods nor services under GST laws & hence are not taxable under the indirect tax regime.

As per the Securities Contracts Act regulations, under Clause 2 (h) Securities include “shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or another body corporate;”

RECs fall under the definition of securities. “These scrips are traded on IEX (Indian Energy Exchange) and PXIL (Power Exchange India Limited) and are electricity derivatives,” the Counsel head believes.

Currently, since the GST is levied on the RECs, RE companies are unable to trade Renewable Energy Certificates if they have incomplete GST registration (KYC) in turn unable to reach their REC obligation. Further, apart from being a financial burden, GST is an operational burden. Also, since there are multiple parties involved in the trade process (Exchanges, sell&buyer, and trading members) it becomes an overwhelming task to understand the GST impact on each of them. This makes REC trading a tedious process.

HPERC announces (Rooftop Solar PV Grid Interactive System based on Net Metering) Order, 2019

Himachal Pradesh Electricity Regulatory Commission recently issued a notification for the order on the Rooftop solar PV Grid Interactive System based on net-metering 2019. The summary of the order is as below:

Applicability: The order will be applicable to all the domestic supply consumers with an approved Letter of Approval post 15th November 2018, as per HPERC (Rooftop Solar PV Grid Interactive System based on Net Metering) Regulations, 2015 and who have thereafter installed such system.

This order will be applicable only in such cases where the domestic supply consumer installs the solar rooftop photovoltaic (PV) grid interactive system based on net metering.

In case of a net-metering plant, the distribution licensee will pay per kWh rate to the domestic supply consumers for the excess energy generated. Further, the same will be applied to ground-mounted solar PV plant from 5MW capacity located in the state. The credit will be equal to 30% of weighted average/kWh rate which the distribution licensee has purchased from the generator.

KERC notifies APPC rate for 2019-2020 & truing up of 2018-2019

Recently Karnataka notified the provisional APPC cost for FY 2019-20 & true up the Average Pooled Purchase Cost of 2018-19. The difference of INR 21 paisa/unit will be paid by the ESCOMs to the RE generators concerned in three equal monthly installments to the extent of energy supplied under APPC during the period from 1st April 2018 to 31st March 2019.

If we look at the price trend since 2015, there has been an upward pattern in the APPC rate of Karnataka. This trend will divert several generators to the REC + APPC route in the coming year.

 

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