All India Regulatory, Policy & Legal Updates · All India Regulatory, Policy & Legal Updates Related to Open Access ... Essar Power to start mining from ... Apr 2015 Executive Summary

All India Regulatory, Policy & Legal Updates Related to Open Access

Apr

2015

India Electron Exchange

Highlights

TPTCL seeks permission to sell Bhutan's power over PX

Issuance of RECs for auxiliary consumption for Shree Renuka Sugars Co-Generation Plant

APTEL delivers a favorable verdict for DB Power

CERC Generic Levellized RE Tariff Regulation (2015-16)

India Electron Exchange Page 1

All India Regulatory, Policy & Legal Update – Apr 2015

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All India power market updates covering all major

regulatory changes and news having direct or indirect

effect on the proceedings of market players i.e.,

Generators, Traders, Open Access Consumers,

Distribution Companies and related entities.



Major Updates Covered

A. All India – Page 5

1. CERC: Transmission Charges at (ISTS) for the Solar Projects commissioned after 1.7.2014

2. CERC: CERC Generic Levellized RE Tariff Regulation (2015-16)

3. MNRE: MNRE Draft guidelines for 2000 MW Solar projects under VGF scheme

4. APTEL: Adani Power gets no clarity on receivables from GUVNL in APTEL

5. CERC: CERC admits JPL’s petition to surrender its 1044 MW LTOA sought for its 1200 MW Angul power plant

6. CERC: TPTCL seeks permission to sell Bhutan's power over PX

7. CERC: Issuance of RECs for auxiliary consumption for Shree Renuka Sugars Co-Generation Plant

8. CERC: CERC invites comments on Amendments to By Laws proposed by IEX

9. APTEL: APTEL delivers a favorable verdict for DB Power

10. CERC: CERC notifies Annual Escalation Rates for Bid Evaluation & Payment of Transmission Service

11. CERC: CERC invites comments on Proposed Framework on “Forecasting, Scheduling & Imbalance Handling for (RE) Stations (wind / solar) at Inter - State Level”

B. Northern Region – Page 7

12. UP: Huge Tariff hike in Rajasthan across categories

13. PB: Punjab ERC proposes to introduce kVAh tariff and Contract Demand system for DS and NRS category consumers with load more than 50 kW and upto 100 kW

14. DL: Delhi Discoms reach out to DERC for Tariff Rationalization and Revision

15. RJ: New Wind Tariff proposed for FY-16

16. UP: UPERC (Rooftop Solar PV Grid Interactive Systems Gross / Net Metering) Regulations, 2015

17. HP: HPERC fixes rate of sale of Free Power by GoHP to HPSEBL for FY16

C. Western Region – Page 10

18. MH: MERC invites comments on Draft Solar Net Metering Regulations 2015

19. MH: MERC extends the applicability of Generic Tariff Order for RE Technologies till 31st July 2015

20. GA & UT: JERCUTS (Solar Power - Grid Connected Ground Mounted and Solar Rooftop and Metering Regulations – 2015) and Solar Power Tariff

21. GJ: Additional Surcharge to be applicable on Gujarat OA consumers

22. MP: Levy and Collection of Fee and Charges by SLDC Jabalpur for FY-16

D. Eastern region – Page 13

23. BH: Bihar Tariff Order for FY 2015-16

E. Southern Region – Page 15

24. KA: KERC HIKES TARIFF FOR FY-16

25. KA: Draft KERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2014

26. KA: Draft 2nd Amendments to Standard PPA in respect of NCE Projects

27. KA: KERC issues draft guidelines for monitoring the use of coal for Co-Generation Plants

28. KL: Kerala proposes New Renewable Energy Regulation

F. North Eastern Region – Page 19

29. ML: MSERC (Terms and Conditions of Open Access) (1st Amendment) Regulations, 2015

30. ML: Meghalaya RPO & Regulations, 2015

31. ML: Meghalaya ERC hikes Consumer Tariff across categories



Power & Energy News

1. Land acquisition major hurdle to Japanese power

plant 2. Odisha to file review petition in OERC on power tariff

hike 3. Tariff cut of 1 per cent likely due to under-recovery

of fuel cost 4. South India will be biggest beneficiary: Piyush Goyal 5. Reliance Power's Sasan UMPP fully commissioned 6. 100 MW Monarchak power plant in Tripura starts

generation 7. Energy storage sector kicked-up about renewables,

micro-grid opportunities 8. KSEB to take solar route to overcome power crisis 9. Govt in talks with lending agencies to raise $3 bn for

solar power projects 10. Power-hungry states to drive smart grid business 11. UP power watchdog approves rooftop solar

regulation 12. RGPPL rejects MahaVitaran's move to terminate PPA

for Dabhol power purchase 13. Adani, JSW vie for majority stake in Monnet Power 14. Essar Power to start mining from Tokisud block in

Jharkhand 15. Global solar energy installations to cross 54 GW this

year: Report 16. NTPC Simhadri unit targets capacity expansion 17. AP power regulator raises 5% tariff for industries 18. Jindal Power says it is puzzled by rejection of bids 19. 600-MW Kameng hydel project water feeding project

completed 20. Ministry of New and Renewable Energy requests all

states to come out with a solar policy 21. Power sector total loan from banks at Rs 5.83 lakh

crore 22. Power output up 10% in April-February 2015 23. Government discontinues subsidy scheme for green

energy 24. Tata Power commissions 2nd unit of Dagachhu

project in Bhutan 25. Decommissioned thermal power units to soon lose

their fuel supply 26. PwC hired as consultant for solar energy scale-up

plan 27. Power plants have enough coal stock; volumes hit

22.8 million tonnes 28. Government yet to devise policies for scaling up solar

capacity to 100 GW by 2022 29. Work for third and fourth units in Kudankulam

Nuclear Power Project to begin in April 2016 30. State discoms seek upto 26% hike in power tarrif 31. Supreme Court resumes hearing on six hydropower

projects in Uttarakhand 32.

32. 20 hydro power projects pending environmental clearance

33. Saal hydropower project in Chamba damaged in landslide

34. Adani in talks to buy Adhunik Power 35. Banks to rethink loan pacts with power companies 36. Government decides to speed up Rs 90,000 crore

power projects 37. RattanIndia Power commissions 270 MW unit 4 at

Amravati 38. NTPC commissions fifth unit of Barh thermal project in

Bihar 39. SJVNL moves SC over denial of green nod to 3 projects 40. Telangana to call bids for 1,000-Mw solar PV projects 41. MP discoms proposes up to 25% power rate rise 42. OERC revokes licences of three Reliance Group

discoms 43. Industrial power tariff goes up by 15-20 paise a unit in

Karnataka 44. Thermal Powertech's 660-mw unit starts commercial

operations 45. CAG finds irregularities of Rs 41 crore in Assam Power

Distribution Company 46. KERC approves average tariff hike of 13 paise per unit 47. AP to spend Rs. 1,000 cr on energy efficiency 48. Budget 2015: FM Jaitley announces 5 UMPPs, extends

10-year tax holiday for power projects 49. Budget 2015: India targets 1,75,000 MW green power

by 2022 50. Indias steps to revive gas-based plants to help banks:

Moodys 51. Jindal coal bid case: Govt report found no proof of

cartelisation 52. Cancelling Jindal Power bid and allotment of mines to

CIL "wrong": High Court 53. Gas power plants get temporary reprieve 54. Losses for SEBs may reduce with improved coal supply

& tariff hike 55. New round of coal block auctions from April: Piyush

Goyal 56. Coal imports to jump 19% to 200 million tonnes in

2014/15: Coal secretary 57. 38 coal mines allotted to Central, State PSUs 58. Non-power sectors may get supplies for 10 years if

coal linkages are auctioned 59. Opposition forces deferment of Mines, Coal Bills in

Rajya Sabha 60. India to import first oil to fill strategic reserves 61. Aggressive bidding for coal blocks is likely to cost

power companies dear



Executive Summary

Financial Viability gets center stage - Tariff Hike across the country

Electricity Distribution Companies across the country are still reeling under losses but there is a significant improvement in

government subsidy disbursement and reduction in aggregate technical and commercial (AT&C) losses in the recent past.

The moderation in imported coal prices, rupee stability and more recently aggressive bidding in coal auctions could lower

Discoms’ power procurement bill. When combined with the discipline on tariff hikes which has been seen over the last two

years, a significant improvement is expected in the financial situation of the power utilities.

The increase in tariff and the disciplined flow of subsidy declared by the state governments to the consumers, would ensure

a better realization per unit for the Distribution Companies and in turn help the turnaround of the generating companies as

well, with smaller payment cycles against their supply and lesser acts of default with increased fund availability at the

Discom end.

While increased tariff comes as a welcome step for the utilities, that’s not so good for the consumers at least in the short

term. What’s also not so good from the industries point of view is the huge increase in Cross Subsidy Surcharge and

Wheeling Charges, which has been seen in many of these tariff orders and which has made open access almost unviable in

most states.

Solar Net Metering Regulation & RE Policies in 20+ States

Indian states are making noticeable progress in implementing rooftop solar net metering with an attempt to expand

distributed solar power infrastructure. This on one hand would bring in additional generation capacity in the system with

limited government funding support, while on the other would also provide power during day time when it is needed the

most. The arrangement would also cut down the AT&C losses significantly with better metering arrangements and primarily

due to tail end generation with simultaneous consumption.

In more than 20 states and union territories across the country Solar Net Metering Regulations have been notified with State

Governments too coming out with the necessary policy directives to support its growth. The regulation will allow electricity

consumers of the states to generate solar energy on their roofs and to consume such generate energy for their internal use

and to feed the remaining surplus solar energy into the distribution system. A successful implementation of these policies

across the country would enable a massive push in India’s solar energy revolution.

SERCs paying more heed to Renewable Energy & RPO – Solar REC Demand rises

Solar REC demand rose from close to 44,869 in Feb 2015 to 68,982 in March 2015, a huge jump by all standards. Non Solar

REC market however dipped from 747,487 to 654,985 RECs in Mar’15. The main reason for the same has been the flexible

outlook adopted by SERCs towards RPO compliance by allowing the carry forward of the REC purchase obligation to the next

Financial Year.

While the demand growth for RECs in March this year is much lower than the growth witnessed last year, the Quarter to

Quarter comparison provide a better picture of the REC market growth. In the last quarter of FY-14 almost 13.5 Lakh RECs

were redeemed while for the same quarter of FY-15 approximately 20 Lakh RECs have been redeemed, which is a jump of

around 48%.

We may also need to note that most SERCs have been accepting the limited RE generation within state as one of the reasons

behind non-fulfillment of RPO. Purchase of RECs is generally considered a pure cash flow with no flow of power associated to

its procurement. But with push towards Solar Rooftop & Net Metering arrangement the RPO fulfillment at the Discom level



may increase which would then provide the necessary comfort to SERCs to ensure a similar compliance by other obligated

Open Access Consumers.

Power deficit may come down this summer as coal output grows

Fewer power cuts are likely this summer after a surge in output at Coal India Limited, which is helping generators amass

record stocks. Fast-track mine approvals, tighter production oversight and more flexibility in coal sales have helped the

sector significantly, while much more is expected to follow once these structural reforms set in completely. Over one year of

the new government at centre the power stations hold 28 million tonnes of coal, a 38% jump from a year ago as per CEA.

The company's output rose 32 million tonnes to 494.2 million tonnes in FY 2014-15, the biggest volume rise in its four-

decade history. Output is expected to jump to 550 million tonnes in FY-16 and 1 billion tonnes by FY-20 as per industry

estimates. With a parallel push towards renewable energy (particularly in form of Solar Rooftops) and high speed progress

on both policy and regulatory front, it would not be too difficult a task as it seemed just a year ago.

Electricity Act Amendment may have to wait till the Monsoon Session of Parliament

The Electricity (Amendment) Bill, 2014, which aims to unbundle power distribution and transmission sectors and throw them

open to competition, is now likely to be tabled in Parliament in monsoon session only. The market was expecting the same

to be tabled in the post recess period of the Budget Session when the parliament was going to function from around 20th

April.

The proposed amendments to the existing Act will promote competition, efficiency, and improvement in the supply of

electricity in the country, potentially resulting in capacity addition and benefits for consumers. Earlier, in February, the

power ministry had indicated that the said amendments to the Electricity Act may come into effect by April. The Cabinet, in

December 2014, approved various amendments to the existing Electricity Act, 2003, with an objective to enable consumers

choice at the retail level among other reforms.

The central government has also said wherever there are existing power purchase agreements, the interests of stakeholders

will be protected, which will be done in consultation with the power regulator. The government through these much needed

structural reforms plans to allow competition at the last mile or for the end-consumer without raising tariff or compromising

on better customer service. It has also laid a lot of emphasis of participative and sustainable growth through promotion of

renewable energy in form of solar rooftops. Solar Net Metering Regulations and Renewable Energy Policy in almost every

state is seen as one of the major enablers in this direction.

Electricity Tariff may come down by 1% due to Coal Auction

Aggressive bidding by power producers in the recent coal block auctions will result in under-recovery of fuel cost ranging

from 39 paise to Rs 1.02 a unit for them for 25 years, according to a study. Consumers, however, stand to benefit, with a

tariff reduction of almost 1% as early as in 2016-17. The coal block auctions have shown that power generation companies

have agreed to forego the mining cost and instead “pay the government” to get hold on to captive mines to guarantee the

supply of coal. The aggregate under-recovery of each bidder is estimated at Rs 800 crore in FY 2015-16, which is likely to

increase to about Rs 1,800 crore by FY 2017-18 as per reports in leading newspapers.

As power generation projects of the winning bidders have existing PPA with distribution utilities, mainly in states like

Madhya Pradesh, Chhattisgarh, West Bengal and Odisha, the average tariff relief is estimated at about 0.9% for consumers in

these four states by FY 2016-17. The coal ministry has concluded the first phase of e-auction of 33 coal blocks. Of these, 12

were for the power sector out of which nine have been allocated so far. These blocks hold geological reserves of 1200

million tonnes, of which extractable reserves are estimated at 60%, enough to provide fuel security for about 6000 MW of

power generation capacity. These were among 200-plus blocks on which the Supreme Court had cancelled mining licences

last year, citing irregularity in their allotment.



The generation companies winning the bids may look at options to bridge the under-recoveries in fuel cost using additional

gains generated from sale of 15% of the untied generation capacity through merchant sale, or short-term trading, as well as

the possibility of quoting higher fixed-capacity charge in the upcoming competitively bid power purchase agreements. But as

the market is seeing slow progress in tie-ups of PPAs for power procurement in long-term and medium-term by the State

Discoms primarily on the back of extremely low but stable price in Power Exchanges, the possibility of sale of untied

generation capacity remains a key concern for IPPs.

Fig: Bhakra Nangal Hydroelectric Power Project



Mar

02 2015

Mar

02 2015

AII India

CERC: Transmission Charges at (ISTS) for the Solar Generating Projects commissioned

after 1.7.2014

The Power Grid (CTU) raised the issue that, as per the CERC (Sharing of Inter-State Transmission Charges and Losses)

Regulations, 2014, no transmission charges were payable for transmission of power from solar generating units which

have been commissioned prior to 30.6.2014 CTU has sought guidance of the Commission regarding levying of transmission charges and

losses from the solar based generation projects commissioned after 1.7.2014

In exercise of the CERC power under Regulation 20 of the “Sharing Regulations” says:

“The Commission may, for reasons to be recorded in writing, relax any of the provisions of these regulations on its own motion or on an

application made before it by an interested person.”

Hence the Commission relaxes the period of three years as specified in the Regulation 7 (1) (u) and (v) of the “Sharing Regulations” which

says:

“(u) No transmission charges for the use of ISTS network shall be charged to solar based generation. This shall be applicable for the useful

life of the projects commissioned in next three years.

(v) No transmission losses for the use of ISTS network shall be attributed to solar based generation. This shall be applicable for the useful

life of the projects commissioned in next three years.”

The Sharing Regulations came into effect from 1.7.2011. As per the above provision of the Sharing Regulations, no transmission charges

and losses are payable by the solar based generation commissioned on or after 1.7.2011 till 30.6.2014.

The Commission till the notification of the Third Amendment to the “Sharing Regulations”, the existing provisions of Regulation 7 (1) (u)

and (v) of Sharing Regulations should continue to operate in respect of solar based generation commissioned on or after 1.7.2014.

Link: http://www.cercind.gov.in/2015/orders/SO3.pdf

CERC: Generic Levellized Renewable Energy Tariff Regulation (2015-16)

CERC has brought out the Terms and Conditions for Tariff determination from Renewable Energy Sources;

determination of generic tariff applicable during the year 2015-16) on 3rd March, 2015. The

Comments/suggestions/objections on the above proposals shall be sent to the CERC latest by 18th

March 2015.

The changes are made in the Capital expenditure of the RE projects. The trend shows that the capital expenditure of all the RE projects has

been increased except for the Solar PV projects where the cost has declined at the rate of 20%,14% & 15% with respect to the FY Year

2013,14,15. The cost of the Solar Thermal is stagnant for the last sine 2013 to Rs 1200 per MW. For the other RE projects the increment is

made at a rate of 3% in reference to the last year.

The increment in the Operation & Maintenance cost per MW of the RE Projects has been 6% since 2013 to 2015 irrespective to the type of

the RE projects. The increment in the Interest on loan and the interest in working capital has been increased to 2% with respect to the FY

2014.

No changes have been made on other factors irrelevant to the type of RE Power project.

Control period

Tariff period

Life of Plant and Machinery & Project Life

CUF ( capacity utilization factor)

http://www.cercind.gov.in/2015/orders/SO3.pdf

http://aptel.gov.in/judgements/Appeal%20No.%20%20186%20of%202014.pdf





PLF (plat load factor)

Auxiliary Consumption

Debt Equity ratio

Depreciation

ROE (return on equity)

O&M cost of escalation

It seems that the honourable Commission has stick on to its old model of generalized levellized tariff for the RE Project. This RE Tariff

Regulation (2015-16) is not providing anything extra to the project developers. The levellized tariff of Solar PV has been reduced to 6.19

Rs/Unit in w.r.t 9.35 Rs/Unit in 2012. This shows that the Honourable Commission has acknowledged the interest of the private

developer in this Solar PV projects. They view that solar market can drive itself without any support of the Indian Government. The recent

decrease in the price of the Solar RECs to 3500/Certificate for the projects commissioned on and after 1.4.2014 and also the introduction

of the vintage multiplier confirm that Commission may decrease the levellized price of solar in near future.

The tariff of the other RE projects hydro, wind & Biomass has been increased in w.r.t 2012 which predicts the intention of the government

that they are still willing to support these projects. The Public hearing on determination of generic levellized generation tariff for

renewable energy sources, applicable during financial year 2015-16. Petition Number 4/SM/2015, Date of Public Hearing 19/03/2015 at

3.00 P.M. at CERC.

In accordance with the Regulation 5 of the RE Regulations, the Commission has to review benchmark capital cost norm for solar PV and

Solar Thermal power projects annually. Accordingly, the Commission has also brought out proposal regarding benchmark capital costs for

solar power projects for the year 2015-16 vide its order in Suo-Motu Petition No.SM/005/2014, dated 3rd

March 2015.

The Benchmark Capital Cost Norm for Solar PV power projects for

the year 2014-15

The Benchmark Capital Cost Norm for Solar PV power projects

proposed for the year 2015-16

Rs 691 Lakh/MW 587.30 Lakh/MW

The Benchmark Capital Cost Norm for Solar thermal power projects

the year 2014-15

The Benchmark Capital Cost Norm for Solar thermal power projects

proposed for the year 2015-16

Rs 1200 Lakh/MW Rs 1200 Lakh/MW

The proposed breakup of benchmark capital cost norm for Solar PV projects for the FY 2015-16:

Sr.No Particulars Capital Cost Norm for Solar PV Project

(Rs. Lakh/MW)

% of Total Cost

1 PV Modules 327.33 55.7%

2 Land Cost 25 4.3%

3 Civil and General Works 50 8.5%

4 Mounting Structures 50 8.5%

5 Power Conditioning Unit 45 7.7%



Mar

06 2015

6 Evacuation Cost up to Inter-connection Point

(Cables and Transformers)

50 8.5%

7 Preliminary and Pre-Operative Expenses including

IDC and contingency

40 6.8%

8 Total Capital Cost 587.33

The Commission proposes the benchmark Capital cost of Solar Thermal project at Rs 12.0 Crore / MW for FY 2015-16 for the “Parabolic

Trough technology”. (No breakup has been defined by the Commission under proposed petition)

Comments/suggestions/objections on the above proposals shall be sent to the CERC latest by 18th

March 2015.

Link:http://www.cercind.gov.in/2014/draft_reg/Petition%20No%20SM%20005%202015.pdf

MNRE: Draft guidelines for 2000 MW Solar projects Under VGF scheme

MNRE has notified the draft guidelines for the development of 2000MW of solar projects. The Solar Projects under the

State Specific VGF Scheme will be set up in the Solar Parks of various states, to be developed through coordinated efforts

of Central and State Agencies.

The scheme envisages providing Viability Gap Funding through SECI to the bidders selected through a transparent bidding process to

procure solar power at a pre-determined fixed tariff. The main highlights of the draft guidelines are given in the points below:

Out of the total capacity of 2000 MW, a capacity of 250 MW will be earmarked for bidding with Domestic Content Requirement (DCR)

The levelized tariff for the term of the Power Purchase Agreement will be Rs. 5.79/kWh

The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Concessional Customs and Excise Duties, Tax Holidays, etc

The upper limit for VGF is kept at Rs.1.0 Cr/MW for open category (Rs. 1.31 Cr/MW for projects in DCR category)

Solar Energy Corporation of India (SECI) will be the nodal agency for implementation of this Scheme. A fund handling charge @1% of the total VGF disbursed shall be payable to SECI out of the sanctioned VGF

The Entire tendered quantity can be located in the Solar Parks in the State(announced by govt.) or Part of the quantity can be located in Solar Park and part outside Solar Park or Entire quantity can be located outside the Solar Park

The minimum project capacity under this scheme will be 10 MW

SECI will purchase power generated at the pre-determined tariff and sell the power to willing State Utilities under 25 years agreement at the applicable tariff after including a Trading Margin of Paisa Seven (7) per kWh.

The procedure for conducting e-bidding and e-auctioning shall be framed by SECI.

It is good to note that promotional VGF is proposed for projects procuring domestic PV panels. The proposed PPA rate of 5.79 clubbed

with VGF is an attractive proposition considering the drop in solar module prices in the recent years. However, the DCR could be raised to

500 MW to encourage foreign players to setup manufacturing facilities in the solar parks proposed in AP and other states, on the lines of

‘Make in India’ mantra of the central government.

http://www.cercind.gov.in/2014/draft_reg/Petition%20No%20SM%20005%202015.pdf









Documents

All India Regulatory, Policy & Legal Updates · All India Regulatory, Policy & Legal Updates Related to Open Access ... Essar Power to start mining from ... Apr 2015 Executive Summary