CSERC’s order on non compliance of RPO by Discoms for the year 2011-12 & 2012-13

Chhattisgarh State Electricity Regulatory Commission (CSERC) passed an order on 15th October 2014 on non compliance of RPO by DISCOM’s of Chhattisgarh for the year 2011-12 and 2012-13.  In the order CSERC said that they will close this matter of non compliance of RPO by DISCOMs. The questions arises in the order is how, as CSERC has not mentioned about any action to be taken or any penalty to be imposed on the discoms for their non compliance. CSERC in its order have concluded that

“Our attention has been drawn towards the fact that in CSPDCL’s tariff determination, final true up for FY 2011-12 has been completed. Therefore, in our opinion, it would not be appropriate to force them for compliance of RPO for FY 2011-12 at this stage. We are also of the view, that penalizing the other respondents/DISCOM for non fulfillment of their RE obligation for year 2011-12 is unjustified”

Similar order was also given for FY 2012-13. The commission has only asked the Discoms to be more vigilant on fulfillment of RPO in the coming years.

The order can be accessed here ( FY 2011-12) and here ( FY 2012-13).

 

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.

REC Trading Report – June 2014

REC trade session for June 2014 was conducted on 25th June 2014. The following is a summary of results -

The total transactional value of non-solar RECs was INR 208.8 million and for solar RECs it was INR 15.4 million. The closing balance of REC inventory for non solar RECs breached the 7 million mark this  month whereas solar RECs crossed 0.23 million mark.

 

 

Non Solar RECs -

In case of non- solar RECs demand almost quadrupled (up by 376%) as compared to last trade session (refer  - May 2014 trade report) and Supply grew by 5.23 %. Non Solar price continued to remain at floor (INR 1,500 per REC). More insights provided in graphical charts below :

Solar RECs -

Total solar RECs issued this month was 27,787 and redeemed were 1654 only. In contrast to non-solar RECs, the demand for solar RECs took a beating as it went down by 22%. Supply rose by 11% w.r.t May 2014.  More details can be found in the graphs below -

Solar RECs finished trading at floor for consecutive 12 months.

Relevant media article can be read here.

REC Trading Report – May 2014

Demand and clearing ratios touched one of the lowest points in three years.

Non-solar RECs:

Demand in May was 29,255, compared to 79,354 in April (down 63% over April) and down 45% from May of last year. The last time demand was this low was in August 2011. Clearing ratios at both exchanges were approximately 0.45%. Closing inventory of RECs is in excess of 69.5 lakh.

Solar RECs: Demand improved marginally from 989 RECs last month to 2,120 RECs. As a result, clearing ratios improved as well – 0.26% in IEX and 4.8% on PXIL, albeit on very low demand compared to existing inventory. Inventory currently stands at over 2.1 lakh RECs.

The low demand is continuing despite penalty orders in Uttarakhand and Union Territories. It will be interesting to watch the approach that the regulators take in the next few months if the non-compliance continues despite orders from them.

To get details about previous months trading session – Click Here.

Our online market tracker tool can be accessed here.

JERC (Goa & UTs) imposes penalty for non-compliance of RPO

Joint Electricity Regulatory Commission (JERC) for UTs and Goa has become the second electricity regulator to impose penalty for non-compliance of RPO targets. JERC (Goa & UTs) had previously through a suo-motu order (dated 27th Dec 2013) directed all obligated entities to comply with RPO targets of FY11 to FY14 by 31st March 2014 and submit a detailed report by 17th April 2014. JERC notes that some of the obligated entities have failed to fulfil the targets.

Goa – In case of Goa, JERC after scrutiny of the report (submitted by former) was of the view that Goa has failed to fulfil Solar RPO targets from FY11 to FY14 and has consequently been directed to submit a detailed report by 21 July 2014. JERC has asked Goa to meet its RPO targets (along with all backlogs) positively.

Andaman & Nicobar Islands – JERC found that respondent has met with all targets up-to FY14. JERC emphasized that quarterly submission of RPO compliance reports to state agency should continue without fail.

Chandigarh – Chandigarh has also fulfilled RPO targets from FY11 to FY14. JERC mentioned that Chandigarh has also submitted the planning report for compliance of RPO targets of FY15.

Dadra & Nagar HaveliJERC has taken serious steps for non-compliance of RPO targets. The utility of Dadra & Nagar Haveli has therefore been asked to deposit INR 110 crore (Provisional) with the state designated agency positively by 30th September 2014 if it fails to comply with targets by 21st July.

The utility has also been directed to submit proposed plan to meet RPO targets of Fy15.

Daman & Diu – As per JERC, Daman & Diu has also not complied with RPO targets of FY11- FY14. The regulator also emphasized that OA consumers in the area of licensee are also required to meet the targets. The utility in Daman & Diu was asked to submit detailed report by 21st July 2014.

Lakshadweep – Lakshadweep has failed to meet non-solar RPO targets for FY11 to FY14. However, no penalty was imposed with respect to such non-compliance.

Puducherry – Puducherry has failed to comply with solar RPO targets for FY11-FY14, noted JERC. In this case also, there was no penalty imposed and the utility of Puducherry was asked to submit detailed report by 21st July 2014.

The additional information w.r.t amendment to principal RPO regulations is that the same has been forwarded to Controller of Publication, Govt. of India for publication. Our blog-post on the issue can be read by clicking here.

For more details refer the order 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.

REC Trade Report – April 2014

We are pleased to bring the REC trade results and our analysis on REC trade session conducted on 30th April 2014.

Following is a brief of the analysis:

April 2014 was the first month of compliance year FY 2014-15. As expected, the volumes in non-solar and solar REC markets nosedived as compared to last months trading session (Refer - Blog – post on  March 2014 REC Trade).  The REC inventory’s closing balance stood at a mammoth 6.6 million RECs. The total RECs redeemed in April 14 were 80,343 RECs only. The RECs issued this month was again a 7digit number – about 1.1 million RECs. Cumulatively, March’14  and April’14 alone added over 3 million RECs, which is 23% of the total RECs issued till date.  This escalation in supply side and almost no demand side participation sums the state of current Indian REC market place.

Non-Solar RECs

Demand dropped by 88% and supply was up by 3.2% w.r.t March’ 14. Price of non-solar RECs remained at floor price – INR 1,500 per REC. Total non-solar redeemed were 79,354 (as per REC registry).

Solar RECs –

Price of solar REC continued to trade at floor (INR 9,300 per REC) for a consecutive 11th month. Demand fell to less than 1,000 and supply rose by 22%. Clearing ratios at both exchanges were close to half percent (0.5%) only. As per registry, solar RECs redeemed in April14 was 989.

For more details please refer table below – Our online market tracker tool can be accessed here.

 

UERC maintains its tough stand for non-compliance of RPO

Uttarakhand – the only state in the nation to have imposed penalty for non-compliance of RPO, has once again stood by its tough stand in the order dated – 22nd Jan 2014. In the order (refer) -

UERC has considered UPCL’s non-compliance as willful contravention of the direction of the Commission and has imposed penalty of Rs.20,000/- on the Managing Director of UPCL. The Commission has also directed UPCL to comply its pending RPO by March 2014, failure to which will attract additional penalty of Rs.2000/Day thereafter.

In continuation to this, UPCL’s MD had filed a review application for reconsideration of commissions directives. After a motion-hearing, UERC has held that review application does not qualify as UPCL failed to substantiate any ground for review or highlight any errors therein.

However, UERC taking note of this, has given UPCL another opportunity for paying the amount of Rs. 20,000 within one week i.e. by 30th April 2014.

UPCL in the hearing has clarified that it plans to meet the RPO of FY12 and FY13 in four monthly installments. The penalty of Rs 2000 per day applicable for non-payment will continue to be in force post 30th April 2014.

The order is available here.

UERC order on RPO compliance for co-gen based CPPs

Uttarakhand Electricity Regulatory Commission (UERC) on April 10th 2014, released a joint order in case of 9 captive power producers, having co-generation units. The petitioners (CPPs with co-gen plants) in reply to show-case notice issued by commission (UERC) on 12th March 2013, had prayed to relax the RPO regulations since they had co-gen units and in support, referred to ApTel’s judgement (2010) in case of Century Rayon vs. MERC, where it was pronounced that co-generation unit cannot be fastened with RPOs.

UERC had recently (28th Dec 2013) made amendment to prevalent RPO regulations of 2010. In this amendment, the definition of obligated entity was modified from -

““Obligated Entity” means the distribution licensee, captive user and open access consumer in the State, which is mandated to fulfill renewable purchase obligation under these regulations;” (2010)

to

““Obligated Entity” means the distribution licensee, captive user (excluding co-generation based  captive power plants) and open access consumer in the State, mandated to fulfill renewable purchase obligation under these regulations.” (2013)

UERC is of the view, that all CPPs having co-gen units will necessarily have tocomply with RPO targets of FY12, FY13 and FY14 (upto 27th Dec 2013) i.e. till the time the amendment was introduced. However, from 28th Dec 2013 onwards, there will be no obligation on CPPs with cogen units. All such CPP with co-gens are asked to meet with RPOs by 31st May 2014 and submit compliance report by 10th June 2014.

UERC also clarified that all other captive users will continue to be regarded as “obligated entity” and such CPPs have to fulfill shortfalls by 30th April 2014 and submit compliance report by 10th May 2014.

The petitioners prayer to quash such show-cause notice letters was also dismissed.

The order can be read in detail by clicking here.

Our previous blog-post on UERC’s landmark order on penalization on UPCL’s MD can be accessed here.

 

MNRE favors REC markets for Solar Power

India’s ministry of new and renewable energy (MNRE) is favoring REC markets for development of solar power. Eminent members of the ministry are of the view that solar REC markets will revive soon as they expect buyers jumping in. This optimism is when physical solar power comes at a lower cost as compared to buying solar RECs (floor price – Rs. 9.3 per REC). That means, obligated entities have less motivation paying for higher solar REC cost than physically procuring it.

Also solar floor and ceiling prices have been fixed upto FY2017. The steep declining trend in cost of solar power makes it more difficult for solar REC markets and demands quick revision of these prices.

Recently Shri Upendra Tripathy who has assumed charge as Secretary of MNRE, spoke at a gathering that process is ongoing for a policy review with the FOR (forum of regulators) and CERC (Central electricity regulatory commission). Mr. Tarun Kapoor, Joint secretary MNRE has alaso asked all states to strictly meet the stipulated targets. It is being anticipated that a new policy for solar REC markets will be put in place as soon as a new government is formed at the center.

FOR has also called for engagement of consultants to review the REC mechanism completely.

Media article can be read here.

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