Circular on supply of fly ash to end users by power plants to increase fly ash utilization

  • In line with its observation that the demand of fly ash has been increasing on year-to-year basis contributing to increase in the fly ash utilization, the Ministry of Power (MOP) issued a circular on September 22, 2021 on supply of fly ash (Circular). Considering the end users of fly ash are commercial ventures and their input costs are accounted for, fly ash should invariably be auctioned through a transparent bidding process.
  • By virtue of the Circular, MOP has issued following guidelines to coal/lignite-based power plants to provide fly ash to the end users for new supply:
    • The power plants are required to provide fly ash to end users through a transparent bidding process only.
    • If some quantity of fly ash still remains unutilized after bidding/auction, then only, as one of the options, it could be considered to be given free of cost on first come first served basis if the user agency is willing to bear transportation cost.
    • If ash remains unutilized even after the aforesaid steps, Thermal Power Plant (TPP) would be required to bear the cost of transportation of fly ash to be provided free to eligible projects.
    • The end users shall be obligated to source the fly ash from the nearest TPPs to reduce the cost of fly ash transportation. If the nearest TPP refuses to do so, the end user project shall approach MOP for appropriate directions.
    • The transportation cost, wherever required to be borne as per provisions of MOEF & CC notification by the power plants, shall be discovered on competitive bidding basis only. TPPs shall prepare a panel of transportation agencies every year based on competitive bidding for transportation in slabs of 50 km, which may be used for the period.
    • The TPPs shall call for bids well in advance so that a transportation panel is in place as soon as the previous panel expires. There should not be gap between the expiry of one panel and the finalization of the fresh panel.
    • The fly ash will be offered to the end users on the competing demand basis, i.e the end users who offer the highest price and seek minimum support for transportation cost will be offered the same fly ash on priority. This will reduce the tariff of electricity and burden on consumers.
    • The power plants may offer fly ash subject to their technical restrictions such as all precautions required for dyke stability and safety. Power plants having lower ash utilizations shall make all efforts to increase the fly ash utilization.

Draft Electricity (Rights of Consumers) Amendment Rules, 2021

  • The Ministry of Power (MOP) has issued a draft proposal for amending the Electricity Act, 2021 to ensure that Distribution Companies (Discoms) provide round-the-clock uninterrupted power supply to all consumers and thereby prevent the need for the use of diesel generators. The draft proposal is open for comments up to October 21, 2021. MOP has proposed the amendments in light of increasing levels of air pollution in most metros and bigger cities.
  • According to the MOP's proposed amendments, State Electricity Regulatory Commissions (SERCs) have to give the trajectory of System Average Interruption Frequency Index (SAIFI) and System Average Interruption Duration Index (SAIDI) for the cities. SAIFI is the average number of times that a power consumer experiences an outage during the year. SAIDI is a description of the length of time all consumers would have been out of power. This is needed if the total number of hours out of service in a year were to be shared (measured in minutes).
  • SERCs can also consider a separate reliability charge for Discoms if they need funds to augment infrastructure to ensure consistent power for consumers. If Discoms are unable to meet the defined standards, Commissions have to make penalty provisions.
  • MOP said that Discoms should provide temporary power connection through a prepayment meter to consumers within 48 hours for construction activities or any temporary usage. This will avoid the use of diesel-generating sets for short-term use.
  • As per the draft, consumers who use diesel-generating sets as a power backup should shift towards clean energy technologies like renewable energy with battery storage in the next five years or according to a timeline set by the State.

Electricity (Transmission System Planning, Development and Recovery of Inter-State Transmission Charges) Rules, 2021

  • The Ministry of Power (MOP) has notified the Electricity (Transmission System Planning, Development and Recovery of Inter-State Transmission Charges) Rules, 2021 (Rules) on October 01, 2021. The Rules have been notified in order to prepare a development plan for Transmission System in the entire country, ensure optimal utilization of resources to subserve the interests of the national economy and provide affordable electricity.
  • Planning & approvals:
    • The Central Electricity Authority (CEA) shall prepare a short-term plan for every year on rolling basis for up to next five years and perspective plan every alternate year on rolling basis for next ten years, for developing the electricity system and coordinating the activities of the planning agencies.
    • The CEA shall prepare a perspective plan for development of transmission system after consultation with all relevant stakeholders i.e. Central Transmission Utility (CTU), State Transmission Utilities, System Operators, Generator and Distribution Companies, associations, and the State Governments.
    • The CTU shall prepare a plan for Inter-State Transmission System for up to next five years on rolling basis every year. This plan will be designed after identifying specific transmission projects which are required to be taken up, along with their implementation timelines, considering the plans prepared by the CEA and deliberation of progress in generation capacity and demand in the country along with the General Network Access requests made by Designated Inter-State Customers. Any congestion in any part of the Inter-State Transmission System and difficulties will be addressed right away. For preparing this plan, the CTU shall consult with the above-mentioned relevant stakeholders.
    • The Inter-State Transmission System projects drawn up by the CTU shall be placed before the National Committee on Transmission (National Committee) constituted by the Central Government and the National Committee shall include a nominee of each Regional Power Committee. The Central Government, after considering the recommendations of the National Committee, shall approve the projects with their timeline for implementation. Further, the Central Government may approve any transmission project as deemed necessary from the strategic point of view without waiting for the recommendation of the National Committee.
  • Connectivity:
    • The Generation or Distribution Companies or Inter-State Transmission System Consumers shall be connected to the network and the same may be able to sell or buy power from any Generator or Distribution Company, or to any entity connected to the Inter-State Transmission System and the Appropriate Commission shall issue regulations pertaining to the General Network Access.
    • All existing long term access granted or deemed granted to a Designated Inter-State Customer may be considered as sanctioned general network for that Designated Inter-State Customer while transitioning to General Network Access, unless otherwise stated. The general network access shall be applied and provided for a specific capacity and the same shall be granted for a specific period. The costs of the connectivity system to the network shall be borne by the connecting entity and the costs of strengthening of the system shall be treated as part of system cost and the same shall be recovered in tariff.
    • The Central Electricity Regulatory Commission (CERC) may specify the duration for which general network access can be granted and the procedure and fees regarding the same by issuing the regulations.
  • Recovery of Inter-State Transmission Charges:
    • The Inter-State Transmission System shall be treated as one integrated system and any Designated Inter-State Customer seeking General Network Access shall pay the one time General Network Access charges as prescribed by the CERC. Further, the existing Designated Inter-State Customers with existing Long Term Access are not required to pay one-time General Network Access Charges. All Designated Inter-State Customers shall pay per Mega Watt tariff as fixed by the CERC as monthly transmission charges in addition to one time General Network Access Charges.
    • In case a Designated Inter-State Customer desires to relinquish the General Network Access, fully or partly, it may be allowed subject to making advance payment of reasonable relinquishment charges as specified by the CERC and ensuring that other Designated Inter-State Customers are not burdened. After complete relinquishment, the Designated Inter-State Customer shall be disconnected from the Inter-State Transmission System.
    • The monthly transmission charges shall be paid by the Designated Inter-State Customers for the General Network Access capacity sanctioned for them or drawal or injections as the case may be, whichever is higher. All drawals or injections within the sanctioned capacity shall be at normal rate and excess drawal or injection over the capacity sanctioned shall be charged at rates, which are at least 25% higher, as determined by the CERC.
    • The CERC shall true up the total Inter-State Transmission System charges every month after obtaining reports from CTU about the additions or reductions in generation or transmission capacity and the number or capacity of General Network Access Consumers.
    • The CTU is responsible for billing, collection and disbursement of the transmission charges as per the regulations notified by the CERC. The liability to pay transmission charges commences from the date of operationalization of the General Network Access.
    • The General Network Access capacity or part thereof can be shared with, sold to or purchased from any other Designated Inter-State Customers as provided under the regulations notified by the CERC. Further, any generator shall be allowed to be connected at the switchyard of another generator which is already connected with Inter-State Transmission System as provided under the regulations notified by the CERC.
    • The CERC shall notify the regulation on fees and charges for CTU to carry out the statutory functions. Further, the Central Government may waive Inter-State Transmission System Charges and losses for notified sources of energy for a specified duration

Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021

  • On October 22, 2021 the Ministry of Power (MOP) issued the following rules for the sustainability of the electricity sector and promotion of clean energy to meet the India's commitment towards climate change:
    • Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021 (Recovery Rules)
    • Electricity (Promotion of Generation from Renewable Sources of Energy by Addressing Must Run and Other Matters) Rules, 2021 (Must Run Status Rules)
  • Timely recovery of the costs due to change in law is very important as the investment in the power sector largely depends upon timely payments. At present, the pass-through under change of law takes time, which impacts the viability of the sector, and the developers get financially stressed. In this regard, the Recovery Rules lays down the following:
    • On the occurrence of a change in law, the monthly tariff or charges will be adjusted and be recovered in accordance with the Recovery Rules to compensate the affected party so as to restore such affected party to the same economic position as if such change in law had not occurred.
    • A 3-week prior notice to the other party about the proposed impact in the tariff or charges has to be given by the affected party.
    • The affected party will furnish to the other party, the computation of impact in tariff to be adjusted and recovered, within 30 days of the occurrence of the change in law or on the expiry of 3 weeks from the date of the notice, whichever is later, and the recovery of the proposed impact in tariff or charges will start from the next billing cycle of the tariff.
    • The impact of change in law to be adjusted and recovered may be computed as one time or monthly charges or per unit basis or a combination thereof and will be recovered in the monthly bill as the part of tariff.
    • As per Rule 5(b), where the agreement does not lay down any formula, the formula given under the said Rule is to be used to calculate adjustment in the monthly tariff due to the impact of change in law.
    • As per Rule 6, the recovery of the impacted amount, in case of the fixed amount will be:
      • In case of generation project, within a period of 180 months
      • In case of recurring impact, until the impact persists
    • The Appropriate Commission will verify the calculation and adjust the amount of the impact in the monthly tariff or charges within 60 days from the date of receipt of the relevant documents.
  • Further, MOP, under the Must Run Status Rules, categorize a wind, solar, wind-solar hybrid or hydro power plant (in case of excess water leading to spillage) or a power plant from any other source as may be notified by the Appropriate Government, which has entered into an agreement to sell the electricity to any person, as a must-run power plant. It further lays down the following:
    • A must-run power plant will not be subjected to curtailment or regulation of generation or supply of electricity on account of merit order dispatch or any other commercial consideration. The electricity generated from a must-run power plant may be curtailed or regulated only in the event of any technical constraint in the electricity grid or for reasons of security of the electricity grid.
    • For curtailment or regulation of power, the provisions of the Indian Electricity Grid Code, 2010 will be followed. In the event of a curtailment of supply from a must-run power plant, compensation will be payable by the procurer to the must-run power plant at the rates specified in the agreement for purchase or supply of electricity.
    • The renewable energy generator is also allowed to sell power in the power exchange and recover the cost suitably. This helps in realisation of revenue by the generator and also the power is available in the electricity grid for use of consumers.
  • The Must Run Status Rules also provide for the Intermediary Procurer to procure electricity for distribution licensees. In this regard, the Must Run Status Rules inter-alia state that the intermediary procurer, an agency nominated by the Central Government or State Government, may procure electricity through a transparent process of bidding in accordance with the guidelines issued by the Central Government under Section 63 of the Electricity Act, 2003 for sale to one or more distribution licensees.

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