The government wishes for the state distribution companies under the scheme to follow the mandate and these discoms with high losses to either privatise operations or appoint distribution franchisees and invest in infrastructure upgradation.
Overall, the Government expects to spend about INR 3 lakh crore of investments in the distribution sector under the ADITYA scheme.
The scheme as per reports is divided into three parts:
The first part proposes infrastructure upgradation including implementation of smart metering worth INR 2,30,000 crore, of which 15% is supposed to be supported by the central government and 10% by the state. The Centre’ share of funding is likely to be approximate of Rs 25,000 crore.
The second part would suggest inefficient discoms to undergo institutional reforms to be able to take advantage of investment support. The scheme envisages lowering aggregate technical and commercial (AT&C) losses of discoms to 12% and eliminating gaps between their costs and revenue. According to the UDAY portal as of January 2020, the average commercial losses of discoms are at 21.35% and the revenue gap at 0.38 paise per unit of power.
The discoms will have a choice to choose to either operate under a public-private-partnership model or supply power through multiple franchisees in all circles of operation within nine months of joining the scheme.
The Discoms’ dues to all the power producers are estimated at INR 82,000 crore being the major factor behind the stressed-out power sector. Finally, the third part of the scheme is talked to focus on the development of human resource and future technologies at central government support of about Rs 1,500 crore.?
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Currently, the Renewable Purchase Obligation (RPO) backlog up to 2018-19 for solar is 3721 MUs and Non-solar is 7189 MUs. UPPCL has entered into a PPA and the discom expects to meet these backlogs by end of FY 2021-22 for solar and mid of FY 2021-22 for Non-solar. The pending 1319 MUs of Hydro Purchase Obligation along with the Solar RPO will be met by the Non-solar purchases as allowed in the UPERC regulations.
Further, UPPCL requested to extend the timeline to fulfil their non-compliance by stating the RE capacity in the pipeline since 2017 and will be commissioned till 2022.
As per UPERCs Promotion of Green Energy through Renewable Purchase Obligation, regulations 2010, it is suggested that a regulatory fund be created in case of the obligated entity is unable to fulfil its RPO mandate. In such a scenario, the obligated entity will deposit the equivalent amount in the fund which will then be counted against its solar/non-solar obligation.
Hence, UPERC has suggested that an RPO Regulatory Fund be created and the necessary amount at a corresponding rate of Re 1.00/- per unit be deposited by UPPCL in it.
The total amount of INR 737.11 crores is to be submitted in four instalments starting Dec. 19, Jan.20, Feb.20 and Mar.20 respectively.
Uttar Pradesh also announced its Deviation Settlement Mechanism regulations for wind and solar in 2018 and Open access regulations in December 2019. Uttar Pradesh has a 3185 MW of RE installed capacity as of January 2020 as per MNRE. ]]>
The CCI found that prima facie denial of open access in the above case did result in violation of Sec 4(2)(c) of the Competition Act 2002. This clause refers to “abuse of dominant position by denial of market access”. The CCI has ordered a detailed investigation in the matter.
The CCI also made certain other interesting observations in the case:
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In the above case, it identified “conflict of interests situation” between the various constituents of the electricity utilities like the Discom, TransCo, SLDC, etc due to “structural linkages”, i.e. common holding structure. The order states the following:
“It appears that OP-2 has leveraged its dominant position in the relevant market to adversely affect the competition in the downstream market, where it is present through its group entity OP-3. The structural linkages between the OPs as depicted in the diagram illustrated earlier also points toward the conflict of interest that exists in the present case. Thus, given the conflict of interest situation that exists in the present case, anti-competitive motive behind such denial by OP-2 cannot be ruled out and may need to be tested in detailed investigation.”
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The case dwells in depth on the jurisdiction of the CCI to rule on such cases given that the EA2003 is also a special statute that deals with all matters of electricity. The CCI finds that there are enough grounds and supporting case laws to justify its jurisdiction as far as competition related matters are concerned across all sectors.
This judgement is certainly a very interesting development for the electricity sector, as denial of open access permissions is a problem across most states. The inherent conflict of interest is evident, as often the Discom itself has to approve OA applications, in what will effectively result in taking away of its own best paying consumers.
The regulatory regime of the sector itself, especially the State Regulatory Commissions (SERCs) have so far taken a view that has supported the Discom’s, at the cost of the overall market and sector. Examples include setting of Cross-subsidy surcharges without regards to the formula and limits defined in the National Tariff Policies, upholding denial of open access in many cases, etc.
It is hoped that an outsider, for example CCI, which does not bring with it the baggage of the SERCs, or the “conflict of interest” that results from the government appointing the electricity regulator and owning the entire value chain, will catalyse real change in the electricity sector.
]]>Gujarat announced 10% of energy procurement to come from renewable sources, for its obligated entities for FY17.
The year-wise RPO targets effective April 2014 are tabulated below:
GERC also introduced the definition of APPC which was hitherto missing. Average Power Purchase Cost (APPC) for the purpose of REC Mechanism is in line with that of CERC and is defined as –
‘Average Power Purchase Cost’ 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.’
In addition, GERC also clarified that a RE project registered under REC mechanism selling power under captive or third party mode will receive payment equal to APPC for excess injection after off-setting its own consumption, from the discom.
The present order on amendment can be accessed here.?
The principal RPO regulations of 2010 can be read here.?
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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:
Accordingly the APPC for FY 2013-14 is finalized to be at?Rs. 3.28/unit.
The following can be read on the payment adjustment issue –
“The difference between the provisional pooled cost of power?purchase @ Rs 2.69/kWh (of FY 2011-12 considered for FY 2012-13) and the?pooled cost now determined shall be paid to the developer in six equal?monthly installments.”
All relevant orders on APPC in other states can be accessed here.
Our previous coverage on APPC of FY 2012-13 in Andhra Pradesh can ?be accessed here.
The present order can be read?here.
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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 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.
]]>It is worthwhile to iterate the definition that the com-mission follows for determination of its APPPC.
‘Pooled Cost of Power Purchase’ means the weighted average pooled price at which the distribution licensee?has purchased electricity in the previous year from all the long-term energy suppliers excluding the purchases based on liquid fuel’. Provided that the purchases from traders, short-term purchases and purchases from renewable sources shall not be taken into account while determining Pooled Cost of Power Purchase.
The power purchase cost incurred by AP DISCOMs were verified by the commission. The order also reads that the difference between new and provisional rate will be paid to the developer in six monthly installments.
For a copy of order –?Click Here
For other recent APPC related updates, please follow the links:
]]>Whats interesting is that it provides a good assessment of the overall power scenario – something that is not so easy to see in the context of recent pessimism about the economy as a whole and the power sector in general. The conclusions are very interesting, and not very intuitive:
- Most of the problems of fuel availability and cost pass through are history. The 12th plan target of adding 88,000 MW capacity seems easily achievable as about 60,000 MW is already under implementation.
” Political and administrative decisions on import-aggregation, pooled pricing and tariff pass-through, have, for all practical purposes, been taken.”
- The recent grid-collapse aside, the transmission portion of the value chain has been well managed and required investment plans are in place
- At the Discom level, the author identifies some factors that will affect the power sector as a whole:
- States are likely to move slowly to resolves issues like open access, free power to farmers, tariff increases. However, the plan for bailing out of discom’s may spur some reform: “This package for distribution companies comes with a host of conditionalities. There have to be regular tariff increases, and states will have to commit to undertake key power sector reforms, including change in the management control of loss-making distribution circles. There will be a quarterly review of distribution companies before the release of fresh funds.”
- State regulators will have to play a leading role in the reform of discoms
- Operatoinalising “open access” as envisaged by the central government will strain the discoms further in the short-term
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