The Ministry of Power has proposed amendments to the Late Payment Surcharge Rules, 2021. One of the proposed amendments (Para 6) proposes that:
It is our suggestion that the proposed Rule 6 be deleted from the final rules. This is because it is unfair to the procurers and infringes upon the sanctity of the contract signed between the two parties. Further, a similar clause to ensure continued payment of fixed charges already exists in case LC is not maintained.
Implementation of Rule 6 could reduce faith that DISCOMs have in the processes for power contracting. This could lead to increased litigation, place undue burden on DISCOM finances, increase consumer tariffs, raise risk of load shedding and contribute to increase in state-owned capacity addition which could affect private investment in the sector. Some of the issues with implementation of Rule 6 are detailed in our submission
The Ministry of Power released its ‘Draft Electricity (Promoting renewable energy through Green Energy Open Access) Rules 2021’ on 16th August, 2021 inviting comments and suggestions on the same. The draft rules include many provisions intended towards the development of open access RE. Some of these key provisions include reduction in the minimum limit of contracted demand to 100 kW, uniform Renewable Purchase Obligation (RPO) for DISCOMs, OA and Captive consumers, a central nodal agency with a centralised registry for all green OA consumers, no Additional Surcharge on green OA, etc. Although the objective of promoting green energy open access is welcome, many crucial concerns remain.
To truly develop efficient and competitive options for supply, a balanced and sustainable policy framework is needed that boosts investor confidence, protects consumer interests, enhances competition, and compensates utilities adequately for the risk they undertake and the services that they provide. The draft rules need to ensure clarity and certainty in processes, compensation at cost to utilities for services provided, and should provide flexibility and choice to consumers to meet their demand. Our comments focus on –
Need for harmonious changes across legal, policy and regulatory instruments: It is unclear whether the Central Govt rules are the right way to achieve changes as these matters are under the ambit of State ERCs under the Electricity Act, 2003. This risks a long, litigious process impeding decision making.
Extending applicability to all open access and captive, not just RE: Any enabling provision, including centralised registry, reduction of eligibility limit to 100 kW etc should not be restricted to RE alone, but extended to all forms of open access and captive, to provide flexibility and choice for consumers.
Size-based differentiation in processes: There should be separate treatment in regulations for consumers with connected load between 0.1 to 0.5 MW, 0.5 to 1 MW and those with load greater than 1 MW.
Replacement of CSS and AS with a single charge: We propose levy of a single surcharge (in place of CSS and AS) which is delinked from cross-subsidy and backing down, with a ceiling for Rs. 2.5/unit for a period of 5 years.
For more specific comments and detailed suggestions, please read our submission below.
The draft rules were also deliberated in a round table hosted by Prayas (Energy Group), details of which are available here.
A virtual roundtable on ‘Renewables, Open Access and the future of Retail Competition in India’ was organised by Prayas (Energy Group) on September 7, 2021. The landscape of the Indian power sector has undergone a drastic change, driven by a shift towards RE as well as consumers migrating away from the DISCOMs. Presently, the share of sales migration stands at close to one-fifth of the total DISCOM sales in India. This increasing migration is a consequence of rapidly falling RE prices as well as increasing corporate commitments towards RE. While the economics does favour RE and subsequent migration via open access and captive routes; the policy environment in the country is yet not conducive towards an accelerated development of these competitive options. The sector remains mired with administrative hurdles, uncertainty regarding open access charges as well as unclear policy provisions. The participants deliberated upon structural issues of the power sector, the challenges faced in implementation and operationalisation of OA as well as the provisions of the recently released Draft Electricity (Promoting renewable energy through Green Energy Open Access) Rules 2021 by the Ministry of Power. The roundtable had twenty discussants, which included representatives from Distribution Companies (DISCOMs), Regulatory Commissions, Sector Experts, Lawyers, Renewable Energy (RE) project developers and Open Access (OA) consumers.
A summary of the key points raised during the discussion and the context-setting presentation given by PEG at the start of the roundtable can be found below.
Ministry of Power released a discussion paper on Market Based Economic Dispatch (MBED) seeking public comments. Ensuring economic dispatch of capacity at the national level can result in savings when compared to current scheduling practices. However, the existing proposal, to be initiated in a phase-wise manner over the next couple of years will have significant techno-economic, contractual, legal and policy implications on the sector. The discussion draft circulated by the Ministry of Powers raises more questions than it answers and fundamentals of the proposals are not detailed adequately. This is also the case with studies conducted to assess benefits from the scheme and the analysis to show DISCOMs over-schedule in practice.
Assuming muted thermal capacity addition going forward, more ‘backed down’ contracted capacity will get scheduled with increase in future demand and the savings from MBED will reduce over time. The proposal, its benefits and required long-term changes for implementation should be evaluated in this context.
Some potential implementation challenges with the current mechanism are detailed below.
Before MBED is launched, it is suggested that multiple pilots with the aim of economic dispatch at the national level be tried out to evaluate the best design, suited to ground realities. Some of these include:
For these pilots, participation by DISCOMs and suspension of right to recall can be incentivised. Such approaches will help better understanding of various risks and to develop appropriate mitigation mechanisms.
Our earlier comments on the 2018 CERC discussion paper ‘Market Based Economic Dispatch of Electricity (MBED): Re-designing of Day-Ahead Market (DAM) in India’ are available here.
The Haryana Electricity Regulatory Commission invited comments for finalization of the Draft Haryana Electricity Regulatory Commission (Prepaid Smart Metering) Regulations, 2021. A few key recommendations provided by Prayas include foremostly the need to consolidate all metering related provisions and regulations in one metering regulations or the SoP. Our submission has also highlighted the need for addressing consumer concerns for application process, grievance redressal and data privacy. We have also suggested finer changes to the draft regulations in order to facilitate easier transition to smart meters for all consumers.
DISCOMs in Uttar Pradesh have filed petitions for true-up for FY 2019-20, Annual Performance Review (APR) for FY 2020-21 and for determination of Aggregate Revenue Requirement (ARR) and tariff for FY 2021-22 before the UPERC. With reference to this, the Commission has issued a public notice dated 08.04.2021 in the matter, seeking comments and suggestions from the public.
Prayas (Energy Group)’s submission highlights several crucial issues and discusses some suggestions that can be implemented in Uttar Pradesh. The submission focuses on making processes more accessible, having accountability for the smart metering program in the state, the need for realistic sales and revenue projections and power purchase planning, and required regulatory scrutiny for information submitted by the DISCOMs.
Ministry of Power (MoP) constituted an Expert Committee to prepare and recommend National Electricity Policy 2021. In letter dated 27th April 2021, MoP solicited suggestions and comments on draft National Electricity Policy. Prayas (Energy Group)’s comments and suggestions on NEP 2021, focus on multiple aspects including the need to:
The draft shared by the Ministry and our detailed suggestions are below.
On 25th May, Prayas made an additional submission to the committee highlighting the need to further retail competition and review need for RE concessions. The submission also provided more details on the idea of group metering pilots for agricultural consumers as well as virtual net metering for public bodies.
This short article, which appeared in the e-edition of The Indian Express newspaper on 15 June 2021, captures the key points in the Prayas submission to the Ministry of Power on the draft National Electriciy Policy.
The Central Electricity Authority (CEA) has sought public comments on the proposed amendment to the notified regulation of CEA (Installation & Operation of Meters) Regulations, 2006. One key recommendation is that CEA should not mandate installation of prepayment meters. We rather suggest an incentive-based approach which can allow DISCOMs to take a carefully planned approach towards the same. This is important as metering and billing is core to DISCOM's functions and are direct interface with consumers. Additionally, we raise caution on assessing the recommendation of using smart meters for LT OA consumers without furnishing details how these meters can be used for required energy auditing. We also suggest that all feeders and DT’s can be monitored better using AMI systems than AMR.
TNERC invited public comments on its draft amendments to its Tariff Regulations. The proposed revision is being carried out to be consistent with, and account for better norms in the regulations of the central and other state electricity regulatory commissions. Such revision of the regulations is a positive step. PEG submitted some comments and suggestions towards better implementation and clarity of the suggested amendments and toward ensuring a robust power sector in the state. These suggestions include:
TNERC issued a consultative paper to discuss the approach on procurement of solar power by the distribution licensee and the related issues of open access (OA), and invited public comments on the same. Prayas submitted comments and suggestions towards the effective implementation of the procurement mechanism, clarity of process, and towards addressing existing and future concerns to ensure a robust RE sector. The highlights are summarised as follows: