Blog by Team REConnect

TNERC announces new Solar Tariff

Tamil Nadu Electricity Regulatory Commission in its latest order dated 12th September has determined tariff for solar power projects. The new tariff will be applicable to the solar projects commissioned in next one year. The order has come in force from its date of issue i.e. from 12th September itself.

The details of the tariff determined are given below:

Open Access charges – The commission as promotional measure has decided to adopt 30% of respective charges, in each of the transmission, wheeling, scheduling and system operation charges to solar power. While for the plants availing REC’s, 100% relevant charges will be applicable. Apart from this the Reactive Energy charges and 30% of parallel operation charges will be applicable.

Cross Subsidy Surcharge – 50 % of the cross subsidy surcharge will be applicable for solar power, same is applicable for other renewable power.

The Tariff determined by TNERC is lower compared to the tariff determined by CERC, as the commission has offered a waiver in the CSS and wheeling charges in order to compensate the difference with the added operational incentives.

Tamil Nadu released its Solar Policy in 2012 with a target of 3GW of solar power by 2015, while the state had an installed capacity of 109.26 MW on 31st July 2014. The new tariffs along with waiver in Open Access charges, will result in more investments in the coming year. In addition to this, if SPO is implemented in the state, it will be a major shot in the arm for Solar power in TN, without which the target seems like a distant reality.

The relevant order can be accessed here.

Our Previous blog post on TN SPO case with APTEL can be read here.

Contributed by Dheeraj Babariya.

TN Govt. Approaches Supreme Court against APTEL Order

Tamil Nadu Government has filed a petition in Supreme Court against the order of the Appellate Tribunal for Electricity (APTEL) dated 21st January 2014. The order says that state government cannot specify solar power obligation (SPO) for special category of consumers (applicable for all obligated entities except TANGEDCO), when there already exists Renewable Purchase Obligation (RPO) for the consumers in the state.

Background – The Govt. of Tamil Nadu drafted its solar policy (announced in 2012), mandating certain consumer to buy solar power, which was finalized by the Tamil Nadu Electricity Regulatory Commission (TNERC) in its order dated 7th March 2013. The order stated that – “As prescribed in the Solar Policy, 6% SPO starting with 3% SPO till December 2013 and 6% from January 2014 is applicable”.

The Tamil Nadu Spinning Mills Association appealed to APTEL for the removal of the Solar Purchase Obligation as RPO does mandate purchase of solar power.

The APTEL in its judgment said that the state commission cannot impose any other obligation such as SPO, as RPO already exists in the state. So the State Govt. has moved to the Supreme Court challenging this , as it clearly intends to impose SPO under its Solar Policy.

It is also worth noting that TNERC has mandated RE purchase to a total of 9% under its RPO regulation, which is one of the highest in India, with 0.05% Solar RPO and 8.95% Non-Solar RPO. The commission in its draft RPO Regulation 2014, has increased the solar RPO to 2% and total to 11%, to bolster Solar Power in the state in case SPO is not implemented.

Our Previous Blog Post on the same matter can be read here.

The recent media Article can be read here.

Preceding APTEL Order is available here.

Contributed by Dheeraj Babariya.

TNERC Extends validity of RE Tariffs

Tamil Nadu Electricity Regulatory Commission (TNERC), through its orders on 25th July and 27th July 2014, has extended the validity of Preferential Tariffs for Wind, Baggase and Biomass based power plants.

The commission in its order has conveyed that the commission is initiating the process for determination of new tariff orders so in meanwhile the validity of tariff dated 31st July 2012 is extended till the issue of next order, the validity of which was ending on 31st July 2014.

The order on wind energy can be read here

The order on the Biomass can be accessed here

The order for the Baggase based plants can be read here

Contributed by Dheeraj Babariya.

TN lifts ban on inter state open access

According to an article in Times of India (refer), Tamil Nadu has allowed consumers and generators in the state to procure and sell power from/to outside states.

The directive comes in continuation to commitment given by Hon’ble CM of TN -  that there would be no scheduled power cuts in the state and also grated “must-run” status to all windmills.

A statement from Raj Bhawan reads -

“In exercise of the powers conferred by sub-section (1) of Section 11 of the Electricity Act, 2003 (Central Act 36 of 2003), the Governor of Tamil Nadu hereby rescinds the Energy Department Notification No. II(2)/EGY/104(c)/2009, published at page 1 of Part II—Section 2 of the Tamil Nadu Government Gazette, Extraordinary, dated the February 17, 2009,”

Following this directive it can be expected that power business in Tamil Nadu becomes more competitive with time.

Wind producers in TN favouring power forecasting & scheduling

As per an article in The Hindu, Tamil Nadu a leader in wind power generation (installed capacity of around 7200 MW) in the country has, off late, been disappointing its wind power producers. TN’s state distribution company (TANGEDCO) has been shying away from purchasing power generated from these generators owing to poor evacuation facility and a “Banking” clause which empowers generators to claim the power previously injected into the grid.

Wind power producers have been making huge losses as TANGEDCO continues to discard the power that is being generated from these wind machines. But a positive side as a consequence of this, seems to be tilting in favour of forecasting & scheduling. Hon’ble CERC had recently barred all commercial settlements envisaged under the RRF mechanism.

Wind power producers (in same article) are betting on forecasting & scheduling to serve as a saviour for them. They say that an estimated declaration of power to be injected, beforehand, is expected to address most issues of TANGEDCO.

More on RRF mechanism can be learned by visiting the following links -

Link 1

Link 2

Link 3

Tamil Nadu drafts RPO targets for FY15 & FY16

Tamil Nadu Electricity Regulatory Commission (TNERC) recently issued a draft order on RPO targets for FY15 & FY16. The following are the targets proposed by the commission: 

Column 1 Column 2 Column 3
Year Minimum quantum of total renewable purchase obligation in %age ( in terms of energy in kWh) Minimum quantum of solar renewable purchase obligation in %age out of total renewable purchase obligation mentioned in Column 2 (in terms of energy in kWh)
2014-15 11.00% 2.00%
2015-16 11.00% 2.00%

This implies that obligated entities (Distribution Licensees only)  in Tamil Nadu will now have to consume a minimum of 9% of non-solar power/RECs and 2% of solar power/RECs to comply with RPO targets in FY15 and FY16. The order is yet to be finalised and comments on the same have been invited no later than 24.02.2014.  

Solar RPO target is a highlight as it has been taken up from currently 0.05 % to 2 %. This shows TN’s strong commitment towards fostering solar generation in the state. Given the fact that a recent judgement by ApTel had set aside state’s ambitious solar policy (for a relevant blogpost – click here), this particular step from TNERC is laudable.

Present draft order can be accessed here.

Previous final RPO order can read by clicking here.

ApTel sets aside Tamil Nadu Solar policy

As per reports, Tamil Nadu’s ambitious solar policy, once assumed to be a game-changer for fostering solar power in the state, has been set aside by the Appellate Tribunal of Electricity (ApTel). A capacity addition of 3000 MW was envisaged under the solar policy till 2015.

“Solar Purchase Obligation (SPO)”; policy’s main driver of demand, has been confronted with a lot of criticism. Various consumer associations had approached relevant forums against such a binding mandate which required solar energy consumption to be 6% (from Jan 2014) out of total energy consumption. According to an article in The Hindu (dated July 7th 2013), Tamil Nadu Electricity Consumers Association (TECA) went to ApTel in June 2013, saying that consumers will not have the required solar energy capacity. According to submissions in the present order by the appellants, TN requires an installed solar capacity 720 MW in the year 2013 and 1500 MW in 2014, to make solar power available for compliance with SPO and RPO targets.

TANGEDCO as a respondent in the order has said that solar RPO of 0.05 % ceased from being into effect from the time SPO was introduced by the state commission.

TANGEDCO, last year, had floated tenders which has currently around 700 MW of solar projects awaiting execution of power purchase agreements. The solar power price discovered through, competitive bidding mechanism,was Rs. 6.48 per unit. Following this recent ApTel order, TANGEDCO is in a fix whether to scrap solar power purchase obligation or to buy power from solar projects and subsequently move TNERC to raise tariffs, to accommodate additional cost of buying costlier solar power.

A copy of this order can be found here.

Media Articles are available in the following links-

The Hindu Businessline

The Hindu  – (dated 6th Nov 2012)

Our relevant blogpost can be read here.

Link to Tamil Nadu’s Solar Policy 2012

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.


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.

TN’s APPC for FY14

Hon’ble TNERC has increased APPC for FY 2013-14 to Rs.3.11/kWh from Rs.2.54/kWh last year. This represents a formidable hike of 22.45%. The tariff is effective from 01.04.2013.

While the APPC has been revised to Rs 3.11, the tariff payable is restricted to 75% of the preferential tariff of the NCES category.

In the case of wind, this will translate to Rs 2.63 (75% of Rs 3.51), resulting in an effective increase of only 3.6%.

In our opinion, there are several potential issues with this:

1) At the outset, the definition used for calculating APPC in TN differs from the one used in other states and one suggested by CERC. By excluding power purchased from liquid fuel sources and short-term power, the APPC determined is lower.

2) The recent amendment by CERC in REC regulations says that a project receiving tariff ‘at APPC’ shall be eligible for RECs. The artificial restriction of 75% of preferential tariff may cause REC eligibility issues as it deviates from the CERC regulation.

Earlier, hon’ble KERC and APERC too revised their APPCs to Rs.3.07/kWh and Rs.2.69/kWh respectively.

The copy of the order can be assessed here.