The Central Electricity Regulatory Commission ('CERC') recently notified the fourth amendment to the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020 ('ISTS Regulations'), through which significant amendments were made to Regulation 13, i.e., the treatment of transmission charges and losses in specific cases ('Fourth Amendment').
Regulation 13(2) of the ISTS Regulations, which grants a waiver of transmission charges for the use of the Inter State Transmission System, inter alia, states that solar and wind renewable energy generation stations ('RE Projects') are, based on when the RE Project has been commissioned, eligible for a waiver of ISTS charges to the extent specified below:
| Commissioning Date | Duration of Waiver | Waiver Percentage |
|---|---|---|
| On or before June 30, 2025 | 25 years | 100% |
| July 01, 2025, to June 30, 2026 | 25 years | 75% |
| July 01, 2026, to June 30, 2027 | 25 years | 50% |
| July 01, 2027, to June 30, 2028 | 25 years | 25% |
| After June 30, 2028 | – | 0% |
The amended Regulation 13(2) clarifies that in case an RE Project has its scheduled commissioning date on or before June 30, 2025, such RE Project may be granted an extension of time to achieve commercial operation. An extension may be granted on account of any force majeure event, including the non-availability of transmission systems, or for delays caused by reasons not attributable to the power producer. Such an extension, however, cannot be granted for a period of more than six months at a time, and cannot be granted more than twice. If an RE Project is granted such an extension, and the RE Project is commissioned before the extended commissioning date, the amended Regulation 13(2) prescribes that the RE Project would be eligible for a waiver of ISTS as if it had been commissioned on June 30, 2025. In effect, an RE Project could be commissioned as late as June 30, 2026 (assuming it is granted a six months extension, twice) and still be eligible for a 100% waiver of ISTS charges.
The intent of permitting only two extensions, totaling to one year, is not clear. The reasons for which the extension could be granted are specified to be those which are beyond the control of the RE Project developer and, accordingly, the developer becoming ineligible to avail of the ISTS waiver after the period of 12 months (for no fault of the developer) may be considered as unreasonable. We expect that the aforesaid period to undergo a review by the CERC/ Courts.
As such, an extension being granted to RE Projects delayed beyond June 30, 2025, is not completely novel to the Fourth Amendment. The Ministry of Power, in an Order dated June 09, 2023, had already provided for such extensions subject to the approval of the 'competent authority'. The Fourth Amendment, however, sheds much needed light on the process for applying for such an extension and clarifies who the competent authority empowered to grant such an extension would be, based on the nature of the RE Project.
In this regard, the Fourth Amendment makes a distinction between Tariff Based Competitively Bid ('TBCB') out RE Projects and non-TBCB RE Projects. It clarifies that in the case of TBCB RE Projects, the competent authority would be determined in accordance with the terms of the power purchase agreement. Other RE Projects (being non-TBCB RE Projects) may be granted such extensions by the CERC, which will take decisions based on the recommendations of a committee that the CERC itself will appoint. Applications to the CERC will have to be made in the form as notified by the CERC (which is yet to be released).
The Fourth Amendment is accordingly a welcome one, as the viability of RE Projects throughout the country is tied to the grant of a waiver of ISTS charges. As certain RE Projects in Gujarat and Rajasthan await much needed clarity from the Hon'ble Supreme Court regarding the laying of transmission lines in areas that form part of the habitat of the Great Indian Bustard, the Fourth Amendment provides a sliver of hope, as such RE Projects may still benefit from this waiver if they are granted extensions by the competent authority.
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