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)

 

APERC notifies Multi Year Tariff order – wheeling tariff for distribution companies

Andhra Pradesh Regulatory Commission has recently notified the new tariffs for wheeling of distribution companies for the financial years 2019-2020 & 2023-2024. The commission came up with the following results & changes post reviewing the comments & suggestions from the stakeholders.

Issues like providing waivers of cross-subsidy surcharge for Firm Renewable Energy (FRE) off-take to Open Access consumers and other such issues were discussed. The commission is of the opinion that according to the Electricity Act 2003 & the APERC (Terms and Conditions of Open Access) Regulation 2 of 2005 in clause 17.1 (iii) also makes open access users in the transmission and/or distribution system liable to pay to the distribution licensee the cross-subsidy surcharge as determined by the Commission from time to time under Section 42 (2) from which captive generation plants for own use are exempted. The commission will, however, reduce such surcharge & cross subsidies gradually as specified in the clauses above.

The distribution loss trajectory FY 2019-2020 to 2023-2024

The loss percentage is based on the estimated energy handled & losses at respective voltage levels with respect to the total input for each year of the control period & the capacity of the existing network.

Key points for the transmission & wheeling charges and losses

  • All the distribution system users shall pay wheeling charges and bear losses in kind.
  • If the entry and exit points are of the same voltage, the wheeling charges corresponding to that voltage shall be collected. If the entry and exit points are at different voltages, the wheeling charges corresponding to the lowest voltage shall be collected.
  • The wheeling tariffs payable and energy losses to be borne shall be related to the contracted capacity in KW at the entry point. For the purpose of collection of wheeling charges, 1 kVA is equal to 1 kW.

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.”

CERC announces regulations for implementation of Interstate Transmission System in the country

The Central Electricity Regulatory Commission (CERC) recently announced a regulation called the Central Electricity Regulatory Commission (Planning, Coordination and Development of Economic and Efficient Inter-State Transmission System by Central Transmission Utility and other related matters) Regulations, 2018 which came into effect from July 2018. The objectives of the regulation are to:

(1) Lay down the broad principles, procedures, and processes to be followed for planning and development of an efficient, coordinated, reliable and economical system of an inter-State transmission system (ISTS) for smooth flow of electricity from generating stations to the load centers;

(2) Ensure wider participation of stakeholders in the planning process and specify the procedures for stakeholders consultation and participation;

(3) Specify procedures to bring about transparency in the planning process; and

(4) Demarcate the roles and responsibilities of various organizations in line with the Act for meeting the above objectives;

The regulation states responsibilities of the concerned entities like the Central Transmission Utility, Transmission Licensees, Regional Power Committee (RPC), RLDCs, NLDCs & SLDCs respectively and their roles in implementing the above-stated objectives of the regulations. This regulation is in accordance with other CERC regulations like Central Electricity Regulatory Commission (Procedure, Terms, and Conditions for grant of Transmission License and other related matters Regulations), 2009; Central Electricity Regulatory Commission (Grant of Regulatory Approval for execution of Inter-State Transmission Scheme to Central Transmission Utility Regulations), 2010; and the Tariff Regulations issued by the Central Commission from time to time under section 61 of the Act.  

Further, the regulation has mentioned the process for the planning of the inter-state transmission and lastly, there are details provided for the process to be followed by CTUs and transmission licensee for application filing in order to start inter-state transmission.

The regulation has come well in time as there have been recent solar PV auctions with Interstate Transmission System connected solar projects. The regulations have also considered the augmentation of renewable capacity addition and Renewable Purchase Obligation with respect to each state in the country.

HERC announces a combined order for multiple matters

Haryana Electricity regulatory commission recently announced an order on multiple matters including Suo Motu for amendment and/or modification of HERC (Terms and Conditions of Determination of Tariff from Renewable Energy Sources, Renewable Purchase Obligation and Renewable Energy Certificate) Regulations, 2010 and its subsequent amendments (hereinafter referred to as RE Regulations, 2010). The Commission invited views and comments from the stakeholders and answered to them individually. The order also talks about the following:

Suo-Moto proceedings on RPO compliance

If an Obligated entity fails to comply with the obligation to purchase the required percentage of power from renewable energy sources or the renewable energy certificates, it shall also be liable for penalty as may be decided by the Commission under section 142 of the Act. Provided that in case of genuine difficulty in complying with the renewable purchase obligation because of the limited availability of renewable energy or non-availability of certificates, the obligated entity can approach the Commission for relaxation or carry forward of compliance requirement to the next year. However, in normal circumstances, the renewable purchase obligation shall not be waived off. Provided further that where the Commission has consented in writing on an application made by the obligated entity to carry forward of compliance requirement, the provision of regulation 58 (1) of these regulations or the provision of section 142 of the Act shall not be invoked.

The petition filed by Amplus seeking implementation of exemption or waiver of  wheeling charges, cross-subsidy charges, transmission and distribution charges and surcharge for ground-mounted and rooftop solar power projects

Waivers/concessions shall be applicable till the aggregate installed capacity of 500MW of Solar PV Plants in the State is achieved, where after the Commission shall review the provision of waivers/concessions taking into account the financial impact on the Distribution Licensees. Further, provided that waivers/ concessions once provided to any project shall be applicable for a period of 10 years,

The petition filed by Haryana Power Purchase Centre (HPPC) on behalf of the Haryana Distribution Licensees seeking a relaxation of Renewable Purchase Obligation

The Commission has considered the above submissions and is of the considered view that, after considerable deliberation, the RPO targets have been fixed. Further, even the Discoms have raised the issue of these targets being on the higher side. Further, it has been submitted by the Discoms / HPPC procurement of RE power in the peak hours will not only add to the demand-supply gap but also add to the surplus and backing down of cheaper conventional power putting an avoidable financial burden on the electricity consumers of Haryana. Hence, the Commission finds no reason to change the RPO targets as appearing in the draft Regulations as the same in the considered view of the Commission attempts to balance the interest of all the stakeholders.

Read the complete order here.

EXTENSION ON WAIVER OF INTER-STATE TRANSMISSION CHARGES AND LOSSES FOR ELECTRICITY GENERATED FROM SOLAR AND WIND SOURCES

The Ministry of Power has released an order  which provides extension on the waiver of intra-state transmission charges and losses for transmission of electricity generated from solar and wind sources. As per the last order dated 14 June 2017, MoP had provided an extension on the waiver of transmission charges for electricity procured from solar and wind sources till 31.12.2019. This waiver has been further extended to 31 March 2022 for electricity transmitted both the sources of renewable energy.

 

The waiver shall be applicable for 25 years from the date of commissioning of the projects and only on those projects entering into PPAs with distribution licensees for sale of electricity for compliance of their RPO. The order also states that the waiver shall be applicable to projects awarded through competitive bidding process.

 

This order continues to encompass the same issues present in the previous orders. It is only applicable to solar projects from which the electricity will be sold to the DISCOMs. Secondly, it will only be on those solar projects entering PPAs for the compliance of RPO.

TSERC DETERMINES RETAIL TARIFF FOR FY 2017-18

The Telangana State Electricity Regulatory Commission (TSERC) has determined its retail tariff in an order dated 26/08/2017 for FY 2017-18. The tariff has been determined as follows:

 

The change in tariff from in the past 3 years can be understood with the graph below:

 

The wheeling loss for NPDCL has been determined as 4.40% and that for SPDCL as 4.20% at a voltage level of 11 kV.

A separate order was released for the determination of cross subsidy surcharge. The change in CSS  for industrial category is as follows:

 

The order can be accessed here. The order determining CSS can be accessed here.

TAMIL NADU DETERMINES DISTRIBUTION AND TRANSMISSION TARIFF FOR FY 2017-18

The Tamil Nadu Electricity Regulatory Commission (TNERC) has determined the distribution and transmission tariff for FY 2017-18. The last time they had determined tariff was in 2014 which means that the tariff has changed after 3 years. The energy charges for different categories is as follows:

 

 

The tariff for industrial and domestic categories hasn’t changed at all. Same is the case with domestic tariff.

 

Wheeling Charges: 21.06 Paisa/Unit

Wheeling loss: 2.45%

Cross subsidy surcharge: 1.67 Rs/kWh

The transmission tariff was also determined by the TNERC. It is as follows:

 

Transmission charges: 3037.30 Rs/MW/day

Transmission loss: 3.81%

 

The distribution and generation tariff can be accessed here. The transmission tariff can be accessed here.

TSERC DETERMINES TRANSMISSION TARIFF FOR FY 2017-18:

The Telangana State Electricity Regulatory Commission (TSERC) has determined the transmission tariff for the FY 2017-18 and FY 2018-19 in its order dated 1/05/2017. The order states the transmission charge and loss as follow:

 

As per previous years, the transmission charge has followed a trajectory as depicted in the following graph:

The order can be accessed here.

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