Electricity (Second Amendment) Rules, 2023

  • The Ministry of Power (MoP), on July 26, 2017 issued the Electricity (Second Amendment) Rules, 2023 (Electricity Amendment Rules), which amend the Electricity Rules of 2005 (Electricity Rules).
  • Key aspects:
    • Under the Electricity Amendment Rules, Rule 15 has undergone modification to encompass several changes:
      • Each Distribution Company (DISCOM) is required to submit a quarterly report to the respective State Commission, detailing the subsidy received and the actual energy consumption by subsidized categories.
      • DISCOMs are obligated to furnish quarterly reports to the relevant State Commission.
      • State Commissions are now empowered to issue orders for tariff implementation without subsidy if the State Government fails to provide advance subsidy payment.
      • State Commissions are authorized to take suitable actions against DISCOM officials for non-compliance.
    • The former Rule 20 (concerning the issuance of orders and practice directions) within the Electricity Rules has been renumbered as Rule 21, while a fresh Rule 20 has been introduced. This new Rule 20 establishes a structure to ensure the financial sustainability of DISCOMs and outlines the following provisions:
      • DISCOMs' trajectory for reducing Aggregate Technical and Commercial losses (AT&C Loss) for tariff determination must align with the trajectory agreed upon by the State Governments and approved by the Central Government under national schemes or programs.
      • State Commissions are responsible for determining the trajectory for collection and billing efficiency of DISCOMs, based on the approved trajectory.
      • Prudent costs incurred by DISCOMs for power procurement are to be taken into account.
      • DISCOMs' reasonable expenses for establishing and maintaining distribution system assets are eligible for pass-through.
      • Deviations from the approved AT&C Loss reduction trajectory will lead to the quantification of gains or losses based on average power purchase cost, with distribution between DISCOMs and consumers in a determined ratio.
      • State Commissions are permitted to provide a reasonable return on equity.

Guidelines for Tariff-Based Competitive Bidding Process for Procurement Power from Grid Connected Wind Power Projects

  • On July 26, 2023, the Ministry of Power (MoP) issued the Guidelines for the Tariff Based Competitive Bidding Process in the context of Procurement of Power from Grid Connected Wind Power Projects (Guidelines).
  • This initiative has been introduced with the dual objective of promoting the augmentation of renewable energy capacity and establishing an unequivocally transparent, equitable, and standardized framework for the procurement of power produced from wind energy sources.
  • The wind power potential within the country has been evaluated by the National Institute of Wind Energy (NIWE) and is approximated to be 1,164 GW when measured at a height of 150 meters above the ground. The majority of this potential is concentrated in eight specific states: Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Telangana.
  • The primary focus of these Guidelines lies in facilitating both inter-state and intra-state transactions involving the sale and purchase of electricity generated through wind energy.
  • The Guidelines have been devised to oversee the efficient procurement of electricity specifically from two categories of grid-connected Wind Power Projects (WPPs): those with a capacity of 10 MW and above, closely integrated with intra-state transmission systems, and those with a larger capacity of 50 MW and above, linked to the expansive inter-state transmission system.
  • Under these Guidelines, the bidder will prepare the bid documents in accordance with these Guidelines. In case there is any deviation the bidder has to take prior approval from the Government for such deviations in the draft RfS, draft PPA, or draft PSA.
  • The Guidelines are exhaustive and incorporate and provide uniformity in all bidding for the wind projects.
  • The Guidelines stipulate that the tariff adopted through bidding should apply specifically at the point of delivery. This implies that all associated expenses and outcomes leading up to the delivery point will be the responsibility of the Wind Power Generator (WPG), encompassing potential costs like transmission charges or losses, as well as Demand Side Management (DSM) charges. As a result, any expenses beyond this delivery point will be the obligation of the entity procuring the power.
  • Furthermore, MoP has also covered various aspects of transmission connectivity, the role to be played by the State Nodal Agency, mechanisms for resolving disputes, charges and losses related to Inter-State Transmission System (ISTS), and other pertinent considerations. These measures aim to facilitate the seamless generation and distribution of power by the generator and its subsequent acquisition by the procurer.

Tamil Nadu Generation and Distribution Corporation Ltd v. Central Electricity Regulatory Commission & Ors

Appellate Tribunal For Electricity (APTEL) | Order dated July 18, 2023 | IA No. 1985 of 2022 in Appeal No. 433 of 2022

  • The Interlocutory Application bearing I.A. No. 1985 of 2022 was filed on behalf of Tamil Nadu Generation and Distribution Corporation Ltd (Appellant/TANGEDCO) seeking interim relief against Order dated September 29, 2022 passed by the Central Electricity Regulatory Commission (CERC) in Petition No. 685/TT/2020 filed by Power Grid Corporation of India Ltd (PGCIL/Respondent No. 2), a deemed transmission licensee, for determination of tariff under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (2019 Tariff Regulations). 
  • In the Impugned Order, CERC while dismissing the petition, held that it is not the appropriate forum for declaring any transmission asset to be of national and strategic importance.
  • The Appellant submitted that transmission system in dispute is the RaigarhPugalur-Trissur HVDC transmission system which is implemented by PGCIL at an investment cost of INR 20,000 crore (approximately) for the purpose of system strengthening to transfer surplus power from Chhattisgarh State 'Raigarh' to Southern Region and also as part of green energy corridor for transfer of Renewable Energy (RE) power from RE rich Southern States to the rest of the country.
  • The Appellant stated that this HVDC system qualifies all the characteristics to be declared as an asset of strategic importance and contended that the CERC has erred in considering the transmission scheme in spite of the fact that no regulatory approval was obtained by PGCIL prior to planning and commissioning of the said asset as mandated by the CERC Regulatory Approval Regulations 2010, even to the fact that compliance to its own regulations is mandatory as per the settled principle of law.
  • The Appellant also submitted that the CERC has also failed to include the tariff under regional component of western regional beneficiaries as per Regulation 6(2) of the Sharing Regulations 2020.
  • The CTU contended that the 6000 MW Raigarh-Pugalur-Trissur HVDC system was planned to import power from Western Region to the Southern Region through direct interconnection between pit head generating stations in Chhattisgarh and load centers in Southern Region. However, considering the surplus scenario and optimistic RE capacity addition projections later on, it was proposed to use the said HVDC system for export of power from Southern Region as well 'bi-directional', accordingly, the HVDC system was planned for 6000 MW import to the Southern Region and provisions for 3000 MW reverse power flow for export from Southern Region.

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