The Ministry of Power ("MoP") vide letter dated November 15, 2019, has issued a circular directing the appropriate commission to revise the norms for determination of generation tariff and/or the transmission tariff to factor the event of prepayment/advance payment of the tariff by the distribution utility/procurer. The MoP also noted that this reduction will also lead to reduction in the retail tariff for the consumer. The letter further states that the distribution utilities making advance payments to the appropriate commission may also develop an appropriate rebate mechanism. Additionally, the letter also directs the appropriate commission to provide a suitable rebate or reduction in generation tariff for power purchased from projects established through competitive bidding.
MoP had earlier issued an order, dated June 28, 2019, regarding opening and maintaining of adequate Letter of Credit ("LC") as payment security mechanism which was made effective from August 1, 2019. A corrigendum dated September 17, 2019 to the order dated June 28, 2019 stated that in case of difficulty in opening of LC, the distribution utility may pay in advance through electronic mode an amount equal to the amount corresponding to at least one day purchase of electricity and inform the respective Load Dispatch Centre ("LDC") of such payment.
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