MPERC Proposes to Revise Open Access Regulation

The Madhya Pradesh Electricity Regulatory Commission (MPERC) on 18th June 24, 2015 has proposed a new regulation for open access power transactions in the state. The proposed regulation will revise the previous open access regulation 2005. The regulation will come into force from the date of publication in the official Gazette.

The regulation will apply to open access customers for use of intra-state transmission system and distribution system, including systems when it is used in conjunction with inter-state transmission system.

The open access will be allowed for Non-conventions Energy sources, Captive Generating Plants of Conventional Energy, and to all other open access consumers with load of 1MW and above.

Categorization of Open Access Consumer:

  • Long-term Open Access: Any consumer availing open access for a period of exceeding 12 years but not exceeding 25 years.
  • Medium-term Open Access: customers availing open access for a period exceeding 3 months but not exceeding 3 years at a time.
  • Short-term Open Access: Consumer availing open access for a period up to one month at a time.

Charges for Open Access: The commission from time to time will fix (calculate) various charges to be payable by the open access consumer to the distribution licensee.

The various charges payable by the open access consumers will include Wheeling Charges, Transmission Charges, and Imbalance Charges.  The OA consumer will also bear Reactive Energy Charge, Interconnection expenses, Operating Charges, additional surcharge and any other charge levied by the commission.

Losses - Apart from this, the open access customers will have to bear energy losses of transmission system and distribution system as approved by the Commission from time to time.

Metering - Open access customers will be responsible for providing ABT compatible interface meters as main meters based on voltage, point and period of supply and tariff category.

Communication facility: The communication facility to be provided by the customer will be defined by SLDC on a case-to-case basis. The open access customer shall have to provide all such facilities.

The more details about procedure and guidelines can be read in the proposed regulations here.

MPERC Proposes RPO Targets till FY 18-19

The Madhya Pradesh Electricity Regulatory Commission (MPERC) through a draft notification dated 30th May 2015, has proposed the amendment to RPO regulation 2010. The draft amendment proposes RPO targets for the upcoming years (till FY 18-19).

The details of the RPO targets being proposed are as in the graphs below:

Earlier on 15th May 2015, the commission in a notification finalized the RPO targets for FY 15-16 at 7% (Solar-1%, Non Solar-6%) and now the commission has come with its draft which proposes RPO targets for coming years. The commission through a separate public notice has invited comments and suggestion on the said draft latest by 22nd June 2015.

The commission’s notification is available here.

MPERC Finalizes RPO Targets for FY 15-16

The Madhya Pradesh Electricity Regulatory Commission (MPERC) on 08th May 2015 has finalized new Renewable Purchase Obligation (RPO) target for FY 15-16. The notified amendment finalizes RPO target for FY 15-16, the details are in the table below:

The MPERC in its previous order dated 19th November 2010, had defined targets till FY 14-15. In the new order the targets hasn’t been increased I.e. it is same as it was for the last financial year FY 14-15. The graph below shows the RPO targets defined by MPERC till date.

The commission could have defined higher targets, keeping in mind that some of the neighbouring states like Rajasthan, Gujarat and Maharashtra has defined higher solar and wind RPO targets. Also the state is having good potential for solar and wind energy generation and it is expected that the state might get some of big solar projects under Mega Solar Project scheme of central government.

The final gazette notification can be accessed here.

Analysis of changes in CSS and its impact on Open Access market

Cross-subsidy regime used as a tool to influence the open access market

In this financial year (FY 2015-16), Andhra Pradesh, Telangana and MP suddenly raised cross-subsidy surcharge (CSS) applicable on industrial units significantly. In the case of AP and Telangana last years’ cross-subsidy was nil, but this year its Rs 2.23 and Rs 1.42 respectively. In the case of MP, the cross subsidy increased from Rs 0.48 to Rs 2.16 (an increase of 350%).

An analysis of several states suggests that cross-subsidy is often increased suddenly and substantially. In each of the above cases, the immediate impact will be that third-party transitions will come to a halt, as they will no longer be viable. For example, in MP the revised CSS is 46% (vs 12% last year) of the applicable tariff. In AP and Telangana, its 40% and 25% respectively.

These three states accounted for approximately 20% of the volume on power exchanges as per the market monitoring report from CERC for February (the most recent available). This volume is likely to dip to insignificance thanks to the steep rise in CSS.

Another good example is the case of Haryana. In FY 2013-14, the applicable CSS was Rs 0.53. Next year it was raised to Rs 2.02 (a four-fold increase). As a result, the traded volume between February 2014 and February 2015 has fallen by half (160 MUs and 86 MUs respectively). One must keep in mind that the above volume includes purchase from Discom’s, if any, on which CSS is not applicable. Thus, the actual fall in volume from open access consumer is must larger.

Changes on the horizon

It is clear from the above examples that cross-subsidy is varied by states to influence the open access market.

However, some fundamental changes are on the horizon. The first one pertains to applicability of CSS on renewable energy. One of the amendments proposed to the Electricity Act, 2003 seeks to remove CSS applicability from renewable energy transactions. This will have a significant impact as it will make RE transactions very attractive. One hopes that states will adopt this in its true spirit.

The second change pertains to the way CSS is calculated by the States. The existing National Tariff Policy (NTP) suggests that CSS be calculated as the difference between the top 5% of the incremental power procured by the Discom (this is often proxy for the most expensive power procured) and the applicable tariff. However, this is a very opaque measure – for example, between 2013-14 and 2015-15, the cost of top 5% of the power in MP fell from Rs 5.47 to Rs 4.59 (a fall of 20%), despite increase in overall costs and tariffs.

The amendments to NTP will require the calculations to be done by taking the overall costs (including the cost of regulatory assets, ie losses incurred by the Discom).



Further, the proposed NTP seeks to limit the CSS to 15% of the applicable tariff in the category. It is noteworthy that till now, NTP has been more recommendatory in nature. For example, it requires that CSS should be brought down progressively to bring it to 20% of the opening level by 2010-11. However, the significant changes done recently clearly indicate that this objective of the policy has not been achieved.

Team REConnect Energy


MPERC Retail Tariff for FY 15-16

Madhya Pradesh Electricity Regulatory Commission (MPERC) through an order dated 17th April 2015 has finalized the retail tariff for the state for FY 15-16.

The tariff defined by the commission are 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. This year the commission has increased the tariff The graph below shows the change between the tariff of FY 14-15 & The tariff of FY 15-16:

Wheeling Charges: The wheeling charges for voltage level up to 33kV will be Rs. 0.23 per unit.

Cross Subsidy Surcharge: The cross subsidy surcharge for FY 15-16 has been worked out at Rs 1.82 per unit.

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

Transmission Charges: The transmission charges for FY 15-16 will be Rs. 0.50 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.

MPERC Finalizes APPC for FY 15-16

The Madhya Pradesh Electricity regulatory Commission (MPERC) has determined the Average pooled power purchase cost (APPC). The new APPC rates will be during financial year 15-16. The definition of the APPC followed by the MPERC -

for the purpose of these regulations ‘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 definition excludes only renewable energy for APPC rate calculation, which is same as followed by CERC.

Accordingly the APPC rates determined for FY 15-16 is Rs. 2.79 per unit, the APPC for FY 14-15 was Rs. 2.66 per unit. The graph below shows the APPC rates for previous years and the change in percentage year-wise.

As it is visible from the Graph that the commission has increased the APPC almost same as previous year, i.e. close to 5% increase for two consecutive years.

The MPERC Order can be accessed here.

MPERC Proposes Net Metering Regulation, 2014

Madhya Pradesh Electricity Regulatory Commission (MPERC) in its latest notification dated 26th November 2014 has proposed draft for Net Metering Regulation. The regulation will be known as MPERC (Grid connected Net Metering) Regulations, 2014. The regulation will come in force from date of notification in the official Gazette.

Under the guidelines of the regulation any consumer in the area of distribution licensee can install a Renewable Energy System, which shall be located in the consumer premises. The distribution licensee will offer provision of net metering to the interested consumers on a first come first serve basis.

The interconnection of the RE systems with the distribution network will be made as per technical standard defined by CEA.

The billing and Energy settlement will be based on the meter readings

  1. If the energy injected by the consumer is more than energy consumed by him then such surplus energy will be carried forward to the next billing period.
  2. If The Energy consumed is more than energy injected by the consumer in such case the distribution licensee will raise invoice for payment of energy consumed, after considering the previous energy credit balance.

Renewable Purchase Obligation (RPO): If the consumer is not an obligated entity then such quantum of energy consumed by the consumer will be qualify towards the RPO of the distribution licensee.

Applicability of Charges: The RE systems under this regulation are exempted from payment of wheeling, banking & cross subsidy charges.

Eligibility for Renewable Energy Certificate (REC): The issuance of REC will be as per CERC terms & conditions of REC regulation 2010.

MP as a state has slowly picked up in terms of Wind capacity addition, and with this regulation in place, the move is clearly towards making it a new solar destination. The Solar RPO in the state is 1% for FY 2014-15, which is relatively high compared to some other big states. The solar normal irradiance is in excess of 5.5 kWh/m2/Day, but only close to 350 MW installed capacity has been achieved so far out of a potential of more than 60 GW. With high incentives and favourable conditions, this regulation will help in significant amount of solar capacity addition.

The commission has invited comments and suggestion from the interested stake holders or individuals, if required a public hearing on the same will be held on 19.12.2014 at 11:00 AM in the Court Room of the Commission.

The public Notice and the Draft Net Metering is available on the links.

Our Previous Blog on MPERC order on RPO can be read here.

Contributed by Dheeraj Babariya

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.

MPERC Amendment in RE Generation Regulation, 2010

Madhya Pradesh Electricity regulatory Commission (MPERC) on 10th September 2014 has ordered amendment for its Cogeneration and Generation of Electricity from Renewable Sources of Energy Regulation 2010. MPERC earlier invited the comments and suggestion and held a public hearing on 9th September 2014.

According to the new amendment the scheduling of Wind power plant with capacities of 10 MW and above and the solar power plants with capacities 5 MW and above shall be mandatory, whereas in principle regulation of 2010 this was missing.

On the other hand, MPERC had proposed 3nd amendment to MPERC (Cogeneration and generation of electricity from renewable sources of energy) Regulations, 2010, in which it wanted to include energy generated from fossil fuel based Co-generation plant under RPO compliance, and exclude such energy generated from availing REC’s. After hearing various stakeholders, MPERC finally decided to drop this amendment with regard to Co-generation, and approved the afore mentioned amendment regarding scheduling of RE power.

Earlier CERC in its order on 06th January 2014(Refer), suspended the RRF mechanism but directed the RE Generators to continue the scheduling and forecasting according to the previous regulation.

The MPERC Draft can be accessed here.

Contributed by Dheeraj Babariya.

MPERC determines retail tariff for FY15

Madhya Pradesh Electricity Regulatory Commission (MPERC) through an order (dated 24th May 2014), has determined the retail tariff for FY 14- 15.       

The new tariff determined for FY15 is same as it was for FY14, The summary of the new tariff for INDUSTRIAL, NON-INDUSTRIAL consumers can be found in the table below –

Wheeling Charges –

Transmission Charges – T
he transmission charges for FY 14-15 has been calculated as Rs .48 per unit, applicable for a consumer having contract demand of 1MW or above. 

Cross-subsidy surcharge – The Cross-Subsidy Surcharge has been computed as Rs .39 per unit.

Transmission losses – The transmission losses for FY 14-15 have been calculated as 3%.

Aforementioned wheeling charges and cross subsidy surcharges are not applicable to consumers availing open access from renewable sources of energy.

The details on this tariff can be read on Page 189 of the Retail Tariff

Our latest Blog post on the retail tariff can be read here

Contributed by – Dheeraj Babariya

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