DERC penalizes state DISCOMs over RPO non-compliance

In a recent development, the Delhi Electricity Regulatory Commission has penalized the state discoms TYPDL, BRPDL, BYPDL for non-compliance of RPO obligations for consecutive three years i.e. FY 13-14, FY 14-15, FY 15-16. The combined order was published after petitions were filed by RE generators in 2014. The resolutions took a long time due to administrative difficulties. 
The petitioners had filed the petitions against these DISCOMs under regulation 11(1) and 11(2) of the DERC (Renewable  Purchase Obligation and Renewable Energy Certificate Framework Implementation) Regulations, 2012 for alleged failure to meet the Renewable Purchase Obligation (RPO). The plea of the petitioners stated that despite the commission allocating funds to the DISCOMs for the purchase of RECs to meet the RPO and the RECs being available in the market, no efforts were made by the respondents to fulfill their RPO, which was a wilful default according to the petitioners and hence they should be penalized.
The DISCOMs were given notices in 2014 and 2015 to which BRPL & BYPL had requested for extension of time doe fulfilling their obligation which was dismissed in 2018.
The order identified major issues in the petition and attended to all at once, the summary of which is stated below:

• Whether cost-benefit analysis is a must factor for socially oriented obligations as RPO

 
The commission stated that the cost of renewable energy has been on the higher side in the previous years and it has now come to a reasonable level. Even when the costs were high, it was mandated in the National Tariff Policy (NTP) to purchase the costly renewable energy in order to take care of the environment issue related to electricity generation. Hence, the Commission felt that the DISCOMs argument that the higher cost of renewable energy will, in turn, affect the electricity was not a legitimate reason for not complying with the RPO obligation.

• Whether non-availability of Renewable Energy Sources in the state can be a reason for not meeting the RPO

 
The commission is of the opinion that the utility can purchase REC to meet their RPO in case there is no availability of renewable energy sources in the state. The state cannot limit its options within itself and look for options as this is a national level cause and is meant to serve a bigger purpose. Hence, the commission disqualified the plea of DISCOMs that renewable energy sources in Delhi are in deficit.

• Whether the exact quantum of Renewable Energy under RPO is mandatory to be known at the beginning of the financial year to meet the RPO.

 
The contention of the petitioner that the RPO targets are not specified before commencing of the year was canceled as the percent of RPO obligation for the respective financial year is given in the RPO regulations and it becomes the DISCOMs responsibility to fulfill this target in a systematic way. Further, the commission also canceled the plea of financial inadequacy being a reason for the insufficient purchase of RPO and pointed out that the DISCOMs need to manage their finances through equity and loan not only for RPO targets but also for other activities of their distribution business.
The commission in its tariff order announced in August 2017 had disallowed 10% of the cost of REC for underachieving of RPO targets by BYPL & BRPL. The 10% disallowance will only be to the discoms once they meet their RPO.
The defaulting DISCOMs post all the discussions were liable to pay a penalty in the following manner:

*TPDDL complied to its RPO for FY 13-14, FY 14-15 & FY 15-16 on 22.02.2017, 25.10.2017 & 29.11.17 respectively.
*BRPL & BYPL did not comply with its RPO continuously for three consecutive years. Deadline till 5th August 2019 was given to make the payment. 
* Rs. 5000 per day penalty is calculated into the no. of days of delay made by the DISCOM
Apart from the above-specified penalty, an individual penalty of INR 1,00,000 was imposed on each DISCOM for FY 2013-2014,& FY 2014-2015 for the failure of meeting their RPO. The respondent Discoms are directed to pay the penalty amount within a month’s time. 
Delhi is the second state to have penalized its DISCOMs over non-compliance of RPO. earlier Bihar Regulatory Commission has also penalized its DISCOMs over RPO non-compliance. The State Regulatory Commissions of our country are getting stringent with each passing day over RPO compliance and making sure that the regulations are followed rigorously.