Discoms can choose to discard plants, govt clarifies

BSES had stated that it has to pay fastened expenses of about Rs 35 crore per thirty days to the Dadri-1 plant, even when it doesn’t supply electrical energy from the unit.

Eradicating the paradox concerning the rights of electrical energy distribution corporations (discoms) whereas exiting energy buy agreements (PPAs) with previous thermal producing stations, the Union energy ministry has clarified that discoms have the liberty to decide on the particular vegetation from which they wish to cease sourcing energy.

The clarification makes it simpler for Delhi’s discom BSES to de-allocate its share of electrical energy from NTPC’s Dadri-I unit, and sends assuring indicators to different discoms within the nation which additionally hope to exit pricey PPAs with the state-run producer.

The ministry stated that numerous organisations had sought readability on one of many clauses within the authorities’s PPA-exit pointers issued in March, which acknowledged that “in case of bulk energy provide agreements, the state/discom might relinquish complete allotted energy from such initiatives which have accomplished 25 years since commissioning of the undertaking”.

As not too long ago reported by FE, some sector specialists interpreted the clause to stipulate that in case of composite PPAs with a number of energy vegetation, discoms can not selectively exit the contract for a particular producing station, they usually must revoke procurement en masse from all items of greater than 25 years.

The Central Electrical energy Regulatory Fee (CERC) has not too long ago allowed Reliance Infrastructure-led BSES to strategy the Union energy ministry for relinquishing electrical energy provide contract from Dadri-I energy plant, as the suitable to allocate or de-allocate electrical energy from CPSE items lies with the central authorities.

NTPC had claimed that BSES can not object to obtain energy underneath composite agreements from the Dadri-I plant citing previous age whereas persevering with to avail electrical energy from Singrauli and Rihand vegetation, which had accomplished 25 years even earlier than Dadri-I. Rajasthan has additionally not too long ago determined to cease procuring electrical energy from NTPC’s Anta and Auraiya fuel energy vegetation, each of which have accomplished 25 years of operation.

Within the newest clarification, reviewed by FE, the ministry defined that the desired clause referred to single initiatives of greater than 25 years previous, and additional reiterated that discoms additionally has the “first proper to avail” energy from previous energy vegetation. “Accordingly, the state might select to proceed to take energy from a undertaking or initiatives or exit from a undertaking or initiatives after completion of 25 years,” the clarification added. The CERC’s 2019 tariff rules had additionally allowed discoms the “first proper of refusal” for procuring electrical energy from previous energy vegetation.

“The facility ministry clarification endorses BSES stand to exit from pricey 25-year previous PPAs,” a BSES spokesperson stated, including that “it’ll enable BSES discoms to supply cheaper and inexperienced energy for customers of Delhi”. BSES had stated that it has to pay fastened expenses of about Rs 35 crore per thirty days to the Dadri-1 plant, even when it doesn’t supply electrical energy from the unit.

Underneath contractual necessities, discoms must proceed paying fastened price to thermal energy vegetation to get better the initiatives’ capital expenditure and canopy debt obligations even when they don’t procure electrical energy. Based on a current report by Discussion board of Regulators, discoms in 12 states within the nation cumulatively pay a hefty Rs 17,500 crore a 12 months to turbines for the facility they don’t use.