MERC Distribution Open Access 2016

MERC (Maharashtra Electricity Regulatory Commission) has come up with the new distribution open access regulation 2016 on 30th March 2016 in the state of Maharashtra.

The key changes in the regulation are:

  1. Allowing sourcing of power from multiple sources.
  2. Allowing sourcing of power from power exchange.
  3. Day ahead open access- The application for grant of day ahead shall be made only 1 day prior to the date of scheduling (Before it was 2 day)
  4. Consumer shall install Special Energy Meter (SEM).
  5. The draft OA regulation had proposed that a consumer having Contract Demand of 500 kW and above will be eligible for OA. However, in the final regulation the existing limit of 1MW has been retained. Had MERC lowered the limit, it would have potentially resulted in a much larger OA market in Maharashtra.
  6. Banking of Renewable Energy is introduced-

6.1.             Credit of banked energy is not permitted during the months of   April, May, October & November.

6.2.           Credit of energy banked during other months is as per the energy injected in the respective TOD (Time of Day) slots.

6.3.           Energy Banked during peak TOD slots can be credited during off-peak TOD   slots whereas energy banked during off- peak TOD slots cannot be credited during peak TOD slots.

 

Illustration: Energy banked during:

 

  • Night off-peak TOD slot (2200 hrs. – 0600 hrs.) may only be drawn in the same TOD slot.
  • Off-peak TOD slot (0600 hrs. – 0900 hrs. & 1200 hrs. – 1800 hrs.) may be drawn in the same TOD slot and also during Night off-peak TOD slot.

(The energy banked during night off peak and off-peak shall not be drawn during morning peak and evening peak)

  • Morning peak TOD slot (0900hrs – 1200hrs) may be drawn in the same TOD slot and also during off-peak and Night off-peak TOD slots.
  • Evening peak TOD slot (1800hrs- 2200hrs) may be drawn in the same TOD slot and also during Off-peak and Night off-peak TOD slots.

 

Impact of the Regulation

MERC has proposed a progressive open access regulation. Consumers in Maharashtra has faced various problems in the past to avail the power through open access such as power from one source only, revision of contract demand and banking of renewable power.

Multiple sources will increase the competitiveness in the market and it will promote the open access. It will also help the renewable sector to boom in Maharashtra as the rate will become more competitive.

Banking of non-firm power will be a boon for the renewable sector mainly solar. As per the credit table depicted above, the generated units in the off-peak and morning peak time can be adjusted in the peak hours.

The regulation can be accessed here.

MPERC Draft Demand Side Management Regulations, 2015

Madhya Pradesh Electricity Regulatory Commission (MPERC) came up with its Demand Side Management draft regulations, on 21st September 2015. It’s the State’s first initiative towards practicing a cost effective method of selecting, planning and implementing measures which intend to have an influence on demand side, either directly or indirectly.

  • The draft regulation describes the demand side management objectives, targets and guidelines.
  • The Distribution Licensee of State and shall undertake the load research to identify its target consumer segments and end uses for DSM programmes to build the necessary database.
  • Distribution Licensee shall formulate a perspective DSM plan covering period of the control period, within one year of notification of these regulations.
  • The benchmarks and DSM plans set by the commission will help the state achieve its objectives of:
    • Power shortage mitigation,
    • Seasonal peak reduction, cost effective energy savings,
    • Lowering the cost of electricity,
    • Reduction in emissions of greenhouse gases etc.

The commission invited comments and suggestions on the same till 29th September, 2015.

The relevant document can be accessed here.

MPERC imposes penalty for non compliance of RPO

In an order dated 20th October 2014, Madhya Pradesh Electricity Regulatory Commission (MPERC) has imposed a token penalty of Rs. 25,000 for non compliance of RPO.  The order is the outcome of the petition filed by M/S Green Energy Association in the matter of non compliance of solar RPO by the obligated entities for the period of FY 2011-12 to FY 2013-14. The respondent Madhya Pradesh Power Management Co Ltd (MPPMCL) plea was that they could not fulfill the RPO in the past years through purchase of RECs due to poor financial condition of Discoms. On hearing both the parties the commission  found the plea of MPPMCL to be illogical at this stage as RECs are available in the market and the retail tariff order for FY 2014-15 includes the amount to procure energy from renewable sources to meet RPO.  Therefore, now non compliance of RPO cannot be neglected and go unpunished.

The order states that

“ The Commission, therefore, imposes a token penalty of Rs. 25,000.00 on the respondent towards non-compliance of the solar RPO target as per the provisions of MPERC (Co-generation and Generation of Electricity from Renewable Sources of Energy) Regulations, 2010, which is to be deposited with the Commission within 30 days of the issue of this order. It may be emphasized that the penalty is a token and does not redeem the failure of the respondent in the matter. The Commission would like to warn the respondent that future non-compliance in this regard would be dealt with severely. “

This order will be appreciated by the RE generators who have a large inventory of RECs lying with them. Similar orders from SERC of Uttarakhand and Union Territories were made in the past. This is a welcome step and we expect other SERCs to come up with similar orders and take strict action against non compliance of RPO.

The order can be accessed here.

Delhi discoms request to waive RPO of FY13

Delhi discoms have requested to DERC, to waive RPO targets of FY13. This request was put forward by discoms in their respective ARR petitions for FY15. The discoms contend that RPO regulations were introduced in Delhi only in October 2012 and as such there was little time in that year to meet the targets. The request can be read as (Petitioner – Delhi discom)-

“In this regard the Petitioner would like to submit that since the Regulations were issued in the mid of FY 2012-13 and the Renewable Energy Generation in Delhi was not fully developed, it was not possible to meet the RPO Targets during FY 2012-13. The Petitioner appreciates the fact that the energy generation through Renewable Energy Sources is required to be promoted by achieving the RPO Targets but at the same time the Renewable Energy Sector is also required to be developed in Delhi for fulfilment of RPO. The Petitioner has invited competitive bids for procurement of Renewable Power for both Solar and Non-Solar plants. The details about the bidding process and shortlisted bidders have already been submitted to the Hon’ble Commission. The Hon’ble Commission would appreciate the fact that RE Generation in Delhi is at nascent stage and will gradually develop in the coming years. The Petitioner in the meeting with the Hon’ble Commission held on October 9, 2012 also highlighted the difficulty in mobilising resources to meet the RPO announced by the Hon’ble Commission.”

Delhi discoms BYPL and BRPL mde reference to MERC’s order dated 7th August 2009, where the RPO targets from FY08 to FY10 were exempted due to shortfall in projected RE capacity addition.

While it is left on DERC to decide on this matter, any decision in favour of the request would further dent the ongoing positive enforcement efforts in other states.

The ARR petitions are available on DERC’s website.

Our recent blog-post highlighting projections by discoms for meeting RPO of Fy15 can be read here.

Relevant media article – Times of India.

Captive power plant of Bokaro Steel Plant is co-gen : Jharkhand ERC

In an order dated 24th March 2014, state electricity regulator of Jharkhand (JSERC) is of the view that the captive power plant of Bokaro Steel Plant (a unit of Steel Authority of India) can be regarded as a co-generation plant. This means that power consumption from CPP of BSL will qualify towards fulfillment of RPO set under relevant regulations of JSERC.

BSL had prayed JSERC to

1. declare its CPP of 302 MW as co-generation power plant,

2. exempt BSL from applicability of RPO and

3. waive the RPO applicable on consumption of power from its CPP during FY11, FY12 and FY13.

CPP of BSL fulfills the definition of CPP as BSL has 50% equity in the plant and consumes 100 % of power generated.

JSERC also considered APTEL’s judgement in the case of MERC vs Century Rayon, where in it was declared that fastening of RPO on  would defeat  the objective of section 86 (1) (e) of the Indian Electricity Act.

JSERC has RPO targets defined till FY16. It has a total of 4% RPO (1% solar & 3% non-solar) for all three years FY14, FY15 & FY16.

BSL also is a distribution licensee in Jharkhand. As per data furnished in the order total RPO applicable on BSL for consumption of captive power comes around – 64.8 MW of non-solar and 17 MW of solar RPO.

The order can be accessed here.

Kerala drafts regulation for net-metering of small solar projects

Kerala State Electricity Regulatory Commission (KSERC) recently unveiled its draft copy of “KSERC – Grid Interactive Distributed Solar Energy Systems, Regulations, 2014” (refer). With this Kerala joins the league of states namely; Tamil Nadu, Andhra Pradesh, Delhi, Punjab and Uttarakhand, which have a similar policy in their respective states. The highlights of the regulation are as under:

Eligibility – All consumers are eligible to install solar energy systems, either self-owned or that owned by a third party.

The maximum capacity of solar energy systems shall be capped at 3 MW and should be in conformity with Kerala Electricity Supply Code’14.

Cumulative capacity of all solar energy systems within a particular area shall be limited to 50% of local transformer capacity. If the cumulative capacity limit exceeds the above limit, licensee is obligated to replace the existing transformer with a higher capacity transformer within 2 months.

Banking facility – Discoms are obligated to provide banking facility to eligible consumers only upto a target capacity of solar RPO. Eligible consumers not in ToD regime is allowed to use the same regardless of any specific period.

Licensee shall provide net-metering arrangement to consumers, and consumer shall be liable to pay security deposit & rent as per norms determined by KSERC.

A consumer can supply excess power to any other self owned premise located anywhere, within the same distribution area, provided wheeling charges of 5% are paid for wheeling of power.

 The consumer will receive payment for excess generation of solar power injected in distribution network at APPC (1.99 Rs. per unit).

If an eligible consumer happens to be an obligated entity as per relevant RPO regulations, then the energy consumed by the consumer will be accounted towards solar RPO.

There shall be no banking or cross subsidy charges applicable on any eligible consumer.

A summary of such policies across other with main points can be read in the table below:

Financial Restructuring plan for DISCOMs almost ready

The readiness of Financial Restructuring Plans (FRP) in some states is heralding good times ahead for present cash-strapped distribution companies.

Distribution companies of Rajasthan, Uttar Pradesh and Tamil Nadu have proactively finalized the process and have already issued bond to lenders, while Haryana is in the process of issuing such bonds. According to data provided in an article of Business Standard, these  four states (out of 7) constitute major chunk of debt (1.9 lakh crore INR).

As per a senior PFC official –  UP will overcome its short-term liabilities by 2014 and TN by 2017. This is expected to bring liquidity in the market and strengthen a timely financial settlement mechanism for power generators.

To encourage reduction of AT&C losses, a transitional financial mechanism has been put in place. The mechanism provides liquidity support equal to the value of additional energy saved through loss reduction. Going forward the emphasis needs to be on increasing tariffs for subsidized consumers rather than subsidizing consumers.

 

Pass RE cost to Industries says MSEDCL

Maharashtra state electricity distribution company limited (MSEDCL) has requested the Hon’ble MERC to consider passing on the cost due to renewable energy purchase to Industries of the state. As per MSEDCL, Industries in the state are responsible for pollution and climate change and consequently they should be burdened with higher purchase cost of RE, not common consumers.

MSEDCL has provided the average cost of RE power purchase to be : Rs. 3.81 per unit, Rs 4.12 per unit, Rs. 4.26 per unit & Rs. 4.32 per unit for FY11 to FY13 respectively. Based on this MSEDCL has requested to segregate the RE power purchase from the ARR so that the overall tariff gets reduced, even-though, a cursory look reveals that the %age in such increase is declining on year to year basis (8.31% to 3.3 % to 1.41 % finally for FY13).

In the form of an additional information, MSEDCL in the order has elaborated that it has met the RPO targets of FY11 and FY12 and has tied with adequate renewable capacity to meet RPO of FY14. However, it has mentioned that due to infirm nature of RE power, challenges remain in claiming the contracted capacity as RE purchase capacity.

However, in the present order Hon’ble commission has stated that burdening one category of consumers with higher tariff is a matter of tariff determination process and has held that such a decision will be appropriately taken up during tariff determination of MSEDCL.

Copy of the order.

RERC to finalize APPC of FY 2011-12

Jodhpur vidyut vitran nigam Limited has submitted to RERC the proposition to finalize the APPC for FY 2011-12 as the audited for  financial year ending by March 2011, are now available.

RERC in an order dated 2nd Nov, 2011 had determined the APPC of Rajasthan to be Rs. 2.57 per unit on provisional basis. In the petition filed ,  the Jodhpur DISCOM, as per audited accounts for FY11 has worked out the APPC of FY 2011-12 to be Rs. 2.7350 per unit. Comments on the same were invited by RERC no latter than 15th Oct 2013. This increase in APPC if finalized will be 6.42 % higher than that declared previously.

The working excel on the same can be accessed on the home-page of RERC –  http://rerc.rajasthan.gov.in/.

It will be pertinent to note that RERC, unlike most states, in its definition of APPC, excludes short term power purchase also along with renewable energy. APPC in Rajasthan is defined as –

“The weighted average 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, excluding short term power purchases and those based on renewable energy.”

APPC for FY 2012-13 can be known by clicking here.

Load shedding; better option than buying power: DISCOMs

The country where power consumers are made to face long hours of power shortage (sometimes up-to 6 hours in some parts), seems to be having this shortage “artificially” created. Cash strapped distribution companies are resorting to power outages than buying additional power from newly commissioned power plants. It is pertinent to note that for DISCOMs “profitability” issue is deterring them to buy additional power. Cost of procuring power for these companies is costlier than their usual selling business.

According to an article in ET (click here), about 18000 MW of new power capacity is  idle as there are no buyers. This capacity if utilized completely is expected to serve around 2 crore households. Only Rajasthan, UP and Tamil Nadu are the states who have invited bids to buy long term power in over 2 years.

For these idle power projects, its getting harder to sign Fuel Supply Agreements (FSAs) as it is a mandate, under the agreement, that only those projects can draw more coal which have signed power purchase agreements(PPAs). In this condition, the projects have no other option but to aggravate inadvertent contribution to NPAs (Non performing assets) in power loans from banks.

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