GERC Determines tariff for small hydro power projects for FY 2016-17

The GERC (Gujarat Electricity Regulatory Commission) on 14th December 2016 finalized the tariff for Renewable Sources of Energy (small, mini & micro hydro projects). The tariff will be applicable for the projects to be commissioned during the year 2016-17.

Previously in the September 2016, the commission notified a draft for the determination of the RE tariff and invited comments and suggestion. After considering all the submitted comments and suggestions the commission has come out with the final tariff. The brief details of the tariff finalized are provided in the table below:

Wheeling of power for third party sale from the small hydro projects will be allowed on payment of transmission charges, wheeling charges and losses of energy fed into the grid, as applicable to normal open access consumers.

The small hydro projects who desire to wheel electricity under third party open access has to pay 50% of cross subsidy surcharge as applicable to normal open access consumers. Also, additional surcharge as determined by the Commission from time to time shall also be applicable for selling power to third party under open access.

The regulation can be accessed here.

RERC Draft Solar Tariff Policy for FY 2016-17

Rajasthan Electricity Regulatory Commission (RERC) recently  proposed a levelized tariff under a draft regulation (RERC Terms & Conditions for Determination of Tariff for Renewable Energy Sources Regulations, 2016) issued for Solar power generators of the state.

The graph below depicts the change in the tariff from the past year:

 

RERC has invited the comments and suggestions by 13th September 2016 on the same. The tariff proposed for FY 16-17 is much lower than the tariff of previous year in case of both Solar PV and Rooftop Solar PV, It can be said that the reason behind the reduction in the tariff of Solar PV is because of decreasing prices of Solar PV cells.

The regulation can be accessed here.

 

MPERC Determines Tariffs for Solar Power Projects

Madhya Pradesh Electricity Regulatory Commission recently released its tariff order for energy procured from solar power based projects for the control period from 31st March 2016 to 31st 2019. The tariff determined by the Commission in this will be applicable to the following Projects located in the State of Madhya Pradesh and selling electricity to the distribution licensees within Madhya Pradesh only:-

(a) Solar PV Power Plants

(b) Solar Thermal Power Plants

The Commission came out; vide its proposal for categorization of solar PV and thermal projects as well as for fixing the norms for technological specific parameters.

The Commission has fixed the normative capital costs inclusive of all components as well as taxes etc. for solar thermal and solar PV projects by keeping in line with the CERC benchmark capital cost of Rs. 12 Crore and 5.3crores per MW for 2016-17. The graphs below gives a comparison of the Capital cost and levelized tariff from the previous control period:

 

The MPERC Regulation can be accessed here.

The MPERC Previous tariff Order can be accessed here.

 

HPERC Electricity Tariff for 2016-17

HPSEBL recently proposed a tariff increase of about 33% with the projected additional revenue requirement of Rs. 1556.70 Crores for 2016-17. The Himachal Pradesh Electricity Regulatory Commission after hearing the stake holders accepted additional requirement of Rs. 154.48 Crores and the corresponding increase in tariff.

The table given below depicts the marginal increase in the tariff for domestic category:

The order can be accessed here.

MERC Determination of Generic Tariff for Renewable Energy for FY 2016-17

The Maharashtra Electricity Regulatory Commission came up with its Draft order on the MERC (Terms and Conditions for Determination of Renewable Energy (RE) Tariff) Regulations, 2015, (“the RE Tariff Regulations”) on 1st April, 2016.The RE Tariff Regulations specify the Terms and Conditions and the Procedure for determination of Generic Tariff by the Commission. The graph below gives a comparison of the RE tariff determined in year 2014-15, 2015-16 to 2016-17 for wind and mini & micro hydro generating stations.

In the Draft Generic Tariff Order for FY 2016-17, the normative Capital Cost for the Solar PV power projects for FY 2016-17 was not declared by CERC and accordingly, the Commission proposed to consider the same Capital Cost of Rs. 605.85 lakh/MW for the Solar PV Projects to be commissioned in the period from 1 April, 2016 to 31 March, 2017.

The graph below gives comparison of Generic Tariffs for Solar Projects in the period from 2016– 21017 to the previous year. The tariff has been determined with AD benefits depending on the type of solar project as follows.:

 

The Generic Tariffs for Wind Energy Projects in the period from 1 April, 2016 to 31 March, 2017 have been determined as follows.  The discount factor for levelisation of Tariff for Wind Energy Projects works out to 10.54%.

The Commission has invited Comments, suggestions and objections from the public and stake-holders, including RE Developers, Distribution Licensees, MEDA, electricity consumers, etc. are on this draft Suo Moto Order.

The Order can be accessed here.

 

KERC Tariff Revision 2017

Karnataka Electricity Regulatory Commission in its order dated 30th March 2016, approved the retail supply tariff for 2016-17. The tariff hike proposed by KERC for domestic category and industrial consumers and a comparison of the existing and new tariff approved by the commission can be seen in the table below:

The table below is the cross subsidy charges worked out as per the different the consumer category.

The order can be accessed here.

MPERC Retail Tariff for FY 16-17

Madhya Pradesh Electricity Regulatory Commission (MPERC) through an order dated 5th April 2016 has finalized the retail tariff for the state for FY 16-17.

The tariff defined by the commission is given below:

The tariff given by the commission for industrial consumer did not see any change between the tariff of FY 13-14 & FY 14-15. But has increased from FY 15-16 to FY 16-17. The graphs below shows the change in the tariff category wise and the % change in tariff year on year respectively.

 

 

 

Wheeling Charges: The wheeling charges have increased for voltage level up to 33kV from Rs. 0.23 per unit to 0.27.

Cross Subsidy Surcharge: The cross subsidy surcharge for FY 16-17 has reduced

Transmission losses: The EHT transmission loss is set at 5.32% and for 33 kV (only 33 kV systems) @ 5.83%.

Industrial Tariff: The industrial tariff has increased from 5.25 Rs/kWh to 5.70 Rs/kWh (132kV)

Transmission Charges: The transmission charges for FY 16-17 will be Rs. 0.60 per unit.

The commission has also mentioned that the wheeling and cross subsidy surcharge will not be applicable for consumer availing open access from all RE sources.

The commission order can be accessed here.

 

 

UERC determines Levelised tariff for Rooftop and Small Solar PV Power Plant

Uttarakhand Renewable Energy Development Agency, had filed a petition seeking determination of Levelised tariff for Rooftop and Small Solar PV Power Plant as per the revised subsidy scheme notified by Ministry of New and Renewable Energy, Government of India (MNRE).

While fixing the tariff for FY 2015-16 in respect of Rooftop and Small Solar PV Power Plants, the Commission had considered applicable level of subsidy of 30% in accordance with the RE Regulations, 2013. Later MNRE vide its notification dated 03.08.2015 reduced the subsidy level for such plants to 15% suspending the earlier notification. Finally MNRE revised the level of subsidy for these plants based on category of project developers as given in the table below.

Considering the benchmark capital cost specified for FY 2015-16 the Commission has determined the applicable tariffs corresponding to level of subsidy for Grid-Connected Rooftop and Small Solar PV Power Plants as requested by UREDA as under:

UREDA would certify the amount of subsidy available to the Grid-Connected Rooftop and Small Solar PV Power Plants and the admissible tariffs applicable for such plants.

 

The order can be accessed  here.

HPERC Declares APPC for 2015-16

The Himachal Pradesh Electricity Regulatory Commission (HPERC) recently came up with its order on the Average Pooled Power Purchase Cost (APPC) for the financial year 2015-16.

The definition of APPC followed by HPERC is in line with the CERC definition and can be read as:

Pooled Cost of Purchase means The weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self-generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be.”

The APPC for the financial year 15-16 has been determined as Rs. 2.31 per Unit, by the commission which shall continue for further period with such variation or modification as may be ordered by the Commission for the next financial year.

The APPC for FY 15-16 is 3.12% higher as compared to the APPC of FY 14-15.The graph given below depicts the APPC’s determined by HPERC over last four years and how the APPC rates have increased over the past three years :

The HPERC order can be accessed here.

Analysis of Amendments in National Tariff Policy

The government recently amended the National Tariff Policy (NTP). Several reform measures have been announced in this change. NTP 2016 has increased focus on renewable energy, sourcing power through competitive bidding and the need for ‘reasonable rates’ (see box – Word Analysis of the NTP).

Executive Summary:

  • Co-generation from non-RE sources to attract RPO

  • Competitive bidding to be the norm for RE procurement (maximum 35% of installed capacity can be sourced from determined/preferential tariff)

  • Provisions for Renewable Generation Obligations (RGO) announced

  • Long term RPO to be announced by Ministry of Power

  • Vintage and technology multiplier allowed in REC

  • Inter-state transmission charges waived off for RE power

  • Solar RPO to be 8% by 2022 (excluding hydro power)

  • Calculation of Cross-subsidy methodology is suggested to be changed to make it less arbitrary

Detailed analysis:

Before delving into the nitty-gritties of the NTP, it is worthwhile to step back and understand the importance of this document. The NTP says that CERC and SERCs “shall be guided” by the tariff policy. Thus, the NTP is in no way binding. In fact, from previous NTP’s several provisions remain only on paper. For example the NTP 2011 required that tariffs be within +-20% of average cost of supply. States have certainly not followed that.

Renewable Purchase Obligations:

  1. The most significant change made is that the ambiguity on applicability of RPO on co-generation has been removed. The NTP 2016 says:

“Provided that cogeneration from sources other than renewable sources shall not be excluded from the applicability of RPOs.”

This change, once incorporated in the regulations of states, will have a significant impact on RPO applicability. Many CPPs are currently avoiding fulfilling renewable obligations due to the regulatory confusion resulting from orders from ApTel (Lloyds Metal) and Gujarat HC

  1. Solar RPO will increase to 8% by 2022. This is a substantial increase as current solar RPO is below 1% in most states.

    Another major change suggested in this clause is that solar RPO will not apply to power sourced from hydro power plants. The policy document states – “8% of total consumption of electricity, excluding hydro power, shall be from solar energy by March 2022”

    This is a significant deviation from the Electricity Act 2003 (EA2003) and current RPO regulations, which require that RPO be calculated on ‘total consumption’. This change will open up major issues in RPO implementation – for example, can this change be done when it is contrary to the requirement of the EA2003, and why should similar exemption not be extended to non-solar RPO.

  1. More clarity has been provided on Renewable Generation Obligation (RGO) provisions.

When RGO provisions were announced earlier, there were concerns of double-counting. However, the current provisions hint that RGO will not be incremental to RPO. The policy says:

  • “The renewable energy produced by each generator may be bundled with its thermal generation for the purpose of sale. In case an obligated entity procures this renewable power, then the SERCs will consider the obligated entity to have met the Renewable Purchase Obligation (RPO) to the extent of power bought from such renewable energy generating stations. 
”

Thus, RGO merely appears to bring thermal generators into the mix and make it convenient to meet RPO. It will not result in expanding the requirement for RE overall.

  1. Long term RPO to be declared by ministry of power in consultation with MNRE.

  1. Provision for allowing vintage multiplier (to take care of cost changes for RE projects) and technology multiplier (to encourage specific technologies) has been incorporated.

Procurement of power:

The preferential tariff regime for RE power appears to be on its way out. The policy says:

“States shall endeavor to procure power from renewable energy sources through competitive bidding to keep the tariff low.

Further, an overall maximum of 35% of installed capacity only can be procured by the state from SERC determined tariff. This limit includes all generation, not just RE.

Transmission of power:

Inter-State transmission charges and losses for renewable power (solar/wind) have been exempted.

This is a welcome change, as it will encourage inter-state transaction of power. However, it seems that this exemption will apply only to wind and solar projects, and not other renewables like small hydro or biomass. The draft policy had suggested that such an exemption apply to power from all renewable energy sources.

Cross-subsidy and open access:

  1. In calculating the cross-subsidy surcharge (CSS) a change in the methodology is proposed. At present, cross subsidy is calculated by using the cost of marginal power (top 5% power at the margin). Instead, now the weighted average cost of power including transmission and wheeling losses will be used.

Further, it is mandated that CSS cannot be more than 20% of the applicable tariff to the category of consumer seeking open access.

As we have shown in earlier articles, CSS determination is often arbitrary and with a purpose to discourage open access. One hopes that with the revised provisions the subjective aspects of CSS calculations will reduce. However, the policy still gives a wide leeway to SERC on this topic:

“Above formula may not work for all distribution licensees, particularly for those having power deficit, the State Regulatory Commissions, while keeping the overall objectives of the Electricity Act in view, may review and vary the same taking into consideration the different circumstances prevailing in the area of distribution licensee.”

Levy of “additional surcharge” has also been made more difficult as it needs “conclusive demonstration” of stranded capacity.

  1. Most provisions regarding open access remain the same as in the 2011 policy document.

However, a relief has been provided by limiting temporary tariff to 125% of normal tariff category.

Other changes:

Some other important changes are:

  1. Differential duties have been discouraged, particularly when states impose differential duties on captive generation.

  1. Licensees have been given the option to charge lower tariffs than those determined by the SERC if competitive conditions so demand.

  1. Provisions regarding micro-grids and protecting the investments made by micro-grid operators have been incorporated.

  1. Smart meters have been mandated for consumers consuming 500 units by 2017 and 200 units by 2019.

  1. Procurement of power from waste-to-energy plants has been made compulsory.

Conclusion:

The changes proposed in the policy are encouraging and can have far-reaching impact, particularly on the RE sector. Provisions regarding RPO on co-gen, higher solar RPO, RGO and competitive bidding can radically change the demand for RE and the way new capacities are set up.

Rational and transparent cross-subsidy calculations can also help in encouraging open access to a large extent.

However, we remain cautious on these changes. The RE related changes will require that states be willing to implement these, and the wide leeway available to SERC on cross-subsidy means that only those states that are anyways in favour of encouraging open access will adopt them. It is unlikely to expand the open access market significantly.

An analysis of the frequency of words used in the NTP 2016 amendment vs the 2011 amendment throws a light on the changing priorities of the government:

The Policy can be accessed here.

Our previous blog on National Tariff Policy can be accessed here.

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