Policy

Centre pushes back against CERC order allowing discoms to exit PPAs

Our Bureau New Delhi | Updated on July 06, 2021

Provides discoms the right to also restructure their agreements

Power distribution companies hoping to exit power purchase agreements (PPAs) with thermal power plants that have completed 25 years since commissioning must give up their “entire allocated power from the project,” the Ministry of Power has said in a circular.

The circular follows the Central Electricity Regulatory Authority (CERC) order last week permitting Reliance Infrastructure-led BSES discoms to exit their agreement with one 210 MW unit of NTPC Ltd’s Dadri power plant, which has a total capacity of 1,820 MW.

“Dadri-1 generating station, having completed 25 years on November 30, 2020, the Petitioners [BYPL] are eligible to exercise the first right of refusal as per provisions of Regulation 17(2) of the 2019 Tariff Regulations,” the CERC said in its order on Thursday.

“It is clarified that allocated power cannot be surrendered partly from a project,” the Ministry said in an apparent pushback to the CERC order, which may have set a precedent that a discom can exit agreements with individual stations of a thermal plant after the completion of 25 years from the date of commissioning.

The agreement under contention between BSES and NTPC had covered a larger 840 MW capacity of Dadri plant, some units of which were commissioned later during the plant’s expansion.

The Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019, provide discoms the right to also restructure their agreements with such old stations to reduce the quantum of power they buy. “Regulation 17(1) gives an opportunity to the distribution companies and generating companies to mutually agree on an arrangement based on scheduled generation,” the CERC order said.

A BSES spokesperson said they view the Ministry circular to be in agreement with the relief given by the CERC order. “Ministry of Power’s circular reiterates CERC order on Dadri-1 and will be hugely beneficial to the 45 lakh BSES consumers of Delhi as it will help reduce the burden of fixed costs as well. It will allow BSES discoms to source cheaper and green power for consumers of Delhi,” the spokesperson said.

Published on July 06, 2021

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