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CEA, through its public notice dated 2nd November 2021 has proposed the modification and deletion of certain data formats. PEG comments offer specific suggestions on the formats related to captive consumption, metering and reliability. In addition, the comments highlight that the formats proposed for deletion of formats should be reconsidered as many of the formats capture:

  • critical data not captured by other agencies
  • crucial data which is available but not compiled or consolidated by other agencies
  • data in a more comprehensive manner than by other agencies or in other formats

Since CEA has the expansive mandate under the Electricity Act to collect data from all those engaged in generation, transmission, distribution trading and use of electricity, it is best based to capture critical trends in a fast changing sector with multiple players and changing market structure. Thus CEA should undertake a comprehensive exercise to:

  • streamline existing data formats to reduce duplication and ease filing by agencies
  • modify and add formats to reflect changing nature of the sector and capture trends in storage applications, renewable energy integration, market procurement etc.
  • exercise penal powers to ensure compliance by various agencies
  • ensure public reporting of data collected by CEA in downloadable spreadsheet formats

Data collection by one agency can aid streamlining, harmonisation and standardisation. CEA can play that role and can collect data for various agencies in the sector as well. 

Prayas (Energy Group) (PEG) organised the fourth edition of the two-day experience sharing workshop on 5th and 12th of October, 2021. The event was held virtually, and was attended by 70 participants working in the electricity sector, representing over eight states. This included NGOs, grass-root organisations, think tanks, and consumer activists.

As has been the prevalent practice in previous years, the workshop was aimed at discussing and deliberating the commonalities and differences across states on various aspects related to the power sector. To allow for more focused discussions, this year’s event deliberated upon the following themes: 

  • Power sector policy making (Reflections on recent proposals):  In this session, there were reflections on the major changes introduced and proposed by central and state governments in India. These include delicencing and privatisation of DISCOMs, push for smart metering, measures to strengthen ERCs and APTEL, proposals to promote sales migration through the renewable route, and introduction of new instruments in power markets, amongst others. The need to strengthen central-state concurrent jurisdiction in decision making was emphasised. This was the first session held on Day 1 of the workshop.
  • Agriculture supply: Electricity supply for agriculture is one of the biggest challenges for DISCOMs, a concern for state governments and a frustrating issue for farmers. Estimation of consumption is doubtful because of poor metering and is linked to AT&C loss. Poor quality of supply and service leads to farmer discontent and non-payment. The proposed DBT approach has many implementation bottlenecks. Solar feeder initiative, promoted under KUSUM, and being implemented in some states has high potential. In this session, experiences from Maharashtra, Andhra Pradesh and Telangana were presented, followed by a discussion on developing a farmer-centric approach to address the challenges. This was the second session held on Day 1 of the workshop.
  • Energy transition challenge and the public interest agenda: While the transition of the power sector offers new opportunities, it is likely to be disruptive, complex, and have far-reaching impacts. In this context, discussions in this session included deliberations on balancing environmental concerns of thermal generation with reliable supply, changing dynamics owing to growing sales migration, evolving roles of regulators, and the varied experiences of state actors, amongst other issues. The continued need to safeguard public (consumer) interest and the role of civil society in a changing sector was also discussed. This discussion was held on Day 2 of the workshop.

Many appreciated the state-level insights and experiences shared during the workshop, but underscored the need for increased and active collaboration among civil society actors.  The need for sustained regulatory engagement and  in-depth policy analysis was emphasised, given the continued regulatory and jurisdictional challenges that exist in the power sector. While everyone missed the experience of physically attending the workshop, participants acknowledged that the virtual engagement proved to be a very fruitful experience. 

The Central Electricity Regulatory Commission (CERC) issued draft (Deviation Settlement Mechanism and Related Matters) Regulations, 2021 regulations on 7th September, 2021 along with an Explanatory Memorandum and invited public comments on the same.

These draft DSM regulations mandate an important element of the framework which ensures reliability, security and stability of the grid in the country. The important points in our submission are

  1. Provide certainty on Normal Rate of Charges for Deviations by keeping the existing DSM price (ACP of DAM) as the ceiling for one year.
  2. Remove incentive to over-schedule and under-inject for Wind and Solar generators by either tightening the under-injection band or providing a graded payment for over-injection.
  3. In the absence of a contract rate (for OA/CPP sellers), the payment into the pool by wind-solar generators for under-injection could be at the Green DAM ACP rather than the ACP of the DAM.
  4. The Commission should set a definitive timeline or a sunset clause (say March, 2023/24) by which all W-S generators will have to align their deviation accounting to their scheduled generation rather than their available capacity.
  5. Reconsider the definition of ‘Renewable Rich State’ or ‘RE-rich State’ from an absolute number of 1000 MW to a percentage (say 10/20%) of total installed capacity.

Prayas (Energy Group)’s comments and suggestions are detailed in this submission.

The Ministry of Power has published draft amendments to the Electricity (Rights of Consumers) rules, 2021. The amendments focus on benchmarking reliability and efforts to reduce the use of polluting diesel generators for back-up power. Our comments and suggestions highlight the need for initiating these changes through amendment of regulations and the need to provide an enabling framework though FoR model regulations or policy provisions rather than rules for the same.

For the enabling framework, our suggestions highlight the need for:

  • Rural and urban benchmarks trajectories at the division level for tracking performance across several reliability indicators (SAIFI, SAIDI, Feeder reliability, DT failure etc.)
  • Better scrutiny of capital investments and detailed assessment of contribution to increasing reliability before the introduction of reliability charges to enable network investments for increased reliability
  • Government support, policy push and regulatory support for providing battery based storage options to ensure reliability for essential public services like health centers and hospitals.
  • Accounting for ground realities and technical feasibility while stipulating accelerated timelines for providing temporary connections, especially through pre-paid mode. 

 

In October 2021 Supreme Court allowed power exchanges to launch forward contracts, regulated by CERC and financial derivatives to be regulated by SEBI.

Forward contracts are different from ready delivery contracts that are currently available on the power exchanges in that the final delivery can take place after 11 days. This enables power exchanges to offer monthly and seasonal contracts which will greatly benefit DISCOMs and C & I consumers.

The judgement also allows for the launch of financial derivatives such as futures. Financial derivatives, unlike forwards do not translate to physical delivery of power and are transferable. Thus they are an effective instrument for hedging risk and can be an important input, among others, to assess electricity price. However such contracts are new and the market segment is relatively small, launch of such contracts must be approached with caution such as the prices discovered in this speculative market do not form the basis for regulatory decision making and investing in the power sector.Further, significant clarity should be provided on jurisdiction, sharing of information and communication between regulators before these contracts are launched.

This article discusses many of these challenges and opportunities in the context of this judgement.

A version of this article in the Moneycontrol on 8th November 2021.

 

Monday, 08 November 2021 17:27

New Discom audit norms will curb T&D loss

The Bureau of Energy Efficiency (BEE) notified regulations in October 2021 prescribing the manner in which the electricity distribution companies are required to conduct energy audits under the Energy Conservation Act, 2001. This article discusses the key features of these regulations and recommends some actions required for their effective implementation.

A version of this article in the Hindu Business Line on 5th November 2021.

The rapidly evolving energy sector needs a feature-rich, publicly accessible and usable analytical framework to examine and understand the sector to inform policy, investments etc. Prayas (Energy Group) has built an open-source, generic, customisable, free-to-use demand-oriented energy systems modelling platform called Rumi with this motivation, and built the PIER (Perspectives on Indian Energy based on Rumi) energy model of India through the decade of the 2020s.

The PIER modelling exercise identifies some interesting trends and policy insights for the Indian energy sector. There is a need for urgent policy attention to increase usage of modern cooking fuels, particularly in some states and regions. Systemic improvements in energy efficiency can help do ‘more-with-less’ in the form of providing better energy services with lesser energy. Consumer behaviour is identified as a key lever, since small changes in behavioural choices can significantly impact the country’s energy demand and supply mix. Regarding electricity supply, the study suggests caution in future coal capacity addition beyond what is in the pipeline as it could lead to undesirable lock-ins if India achieves its renewables targets. The PIER exercise also suggests that it may be desirable to revisit the relative shares of solar and wind in its planned renewables portfolio.

In addition to the above insights, the report presents various other results that may be of interest, such as the share of space cooling in residential demand and peak demand, the electricity generation mix in future years and India’s import dependence for various energy sources.

Rumi can be downloaded and used from https://github.com/prayas-energy/Rumi, and PIER can be downloaded and used from https://github.com/prayas-energy/PIER. In addition, the set of key outputs from PIER are available for download as a spreadsheet from this page.

We hope that the energy modelling community finds Rumi and PIER useful and will enrich them further using their own assumptions, data and methodology.

Thursday, 14 October 2021 17:44

Free power at a big price

With state elections nearing, many political parties are making promises on free power. In this article, we argue that free power to agriculture or households has many adverse impacts and what is required is targeted subsidy to the needy. Some suggestions for this are also given.

A version of this article was published by The Hindu on 13 October 2021.

The Ministry of Power has proposed amendments to the Late Payment Surcharge Rules, 2021. One of the proposed amendments (Para 6) proposes that:

  • If any payment is delayed for more than seven months, generating companies can sell contracted power to other consumers till payments are cleared.
  • This is provided that DISCOMs are given a notice of 15 days.
  • During this period, the DISCOMs have to continue to pay fixed charges to the generator.

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.

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