Tag Archives: CERC

CERC allowed ESSAR power to trade more than 120% of power above prescribed limit

Essar Electric Power Development Corporation Limited which is a Category C trader , according to which they can trade upto 500 MU in FY-2013-14. However, the company approached CERC , to allow them trade power volume more than prescribed i.e 120% above the limit.

Taking into consideration CERC allowed the company to trade power above limit. The company has to submit the extra fees as per category II trader.

See complte order

order_16rc_190314

Right to choose your Source of Power – Open Access

 

 

Power-plus

Where we stand after 11 years.

 

The Electricity Act 2003 (EA-2003), introduced the idea which allow power consumer to have choice to choose their power supplier from the same state or even outside the state apart from the designated DisCom of the area. This was termed as “ Open Access”, the act defines OA as “non-discriminatory provision for use of transmission lines or distribution system or associated facilities with such lines or system  by any licensee or consumer or a person engaged in generation in accordance with the Regulations specified by Appropriate Commission.”

 

The Regulations for availing Open access have been formulated by CERC for accessing the Inter-state Transmission network; and by SERC’s for accessing the Intra-state Transmission and Distribution network in respective states.

 

Open Access is one of the most important features of the EA 2003 wherein, distribution companies and eligible consumers have the freedom to buy electricity directly from generating companies or trading licensees of their choice and correspondingly the generating companies have the freedom to sell to any licensee or to any eligible consumer.

 

However, after 11 years the Open Access still remain a mystery for most of the eligible consumers. The government support in this matter is limited and very less initiatives were taken up to educate the consumers about OA. On the other hand the DisComs are most of the time reluctant to provide clearances for OA with fear of losing their premium consumers. All this led to the uprising of many consultants/service providers which provide services regarding OA.

 

IndianPowerSector.com together with Power Plus Consultants , has come with a Report showcasing some of the states with snapshot of how to get OA and what are the different charges applicable. The report is a Pre-cursor to the next extensive report on Open Access market in India. The gist of the report can be summarized in the table below:

 

Challenge Remarks
Approvals from Govt Officials Biggest challenge in front of various solar generators and consumers is to get approvals from Govt officials of discoms and sldc’s Before applying to discoms and SLDC, a generator or consumer should know the proper procedure and application formats
Lack of Knowledge In various approval you have to deal with assistant engg., junior engg. whom has little or no knowledge of Open Access Commission should make a single window clearance system for Open Access
High Open Access Charges Some states like Punjab, Maharashtra has a very high open Access Charges which is a major roadblock in the implementation of Open Access Solar Developers should try to identify those states where the Open Access charges are low
Cross Subsidy Surcharge Some states has a high mismatch between the tariff of different category of consumers resulting in high cross subsidy surcharge Nation Tariff Policy says tariff should be in the range of +/-20% of the average cost of supply, so all states are moving towards it and gradually in future css becomes zero
Installation of ABT meter ABT meter is to be installed at respective substation of the clients but space avalabilty is biggest problems at these substations Transmission companies should develop more spacious substation seeing the growing demand of Opne Access
Independent Feeder Open Access in most states is allowed to only the consumers connected on Independent feeder but most of the substations are already overloaded in our country More capacity substation should be planned

 

 Download Complete Report

 

For any type of support required on Open Access , consumer may please write to info@indianpowersector.com

 

 

 

NTPC takes CERC to court over new tariff guidelines

ate-run NTPC has filed a writ petition in the Delhi High Court, seeking a stay on the tariff guidelines recently issued by Central Electricity Regulatory Commission (CERC) for power plants catering to more than one state. Arguing that the regulator lacked consistency in its principles for tariff determination, the PSU said the new norms would hit its profitability.

The new CERC guidelines will come into effect on April 1 and remain in force till March 31, 2019.

The NTPC stock had tanked to a five-year low on February 24, following the regulator’s final tariff order.

The new norms are aimed at increasing the operational efficiency of power plants, but would reduce profits of the PSU’s ageing plants. The regulator has removed many incentives for generation and transmission, which it thought added to inefficiency and was unfair to the consumer. Many of NTPC’s older plants have higher cost structure and the new regime would constrain its ability to recover such costs.

A senior CERC official confirmed to FE that NTPC has legally challenged the new tariff regulations.

The details of the grounds on which the petition has been filed were not known immediately.

cONTINUE READING

India Puts Wind Forecasting on Hold on Inaccurate Results

An Indian rule requiring wind farms to predict output or face fines has been temporarily suspended as the regulator reconsiders the best way to ensure stability of the grid, which suffered the world’s biggest outage in 2012.

“The mechanism has been put on hold,” said Sunil Jain, chief executive officer at Hero Future Energies Pvt. and president of the Wind Independent Power Producers Association.

The Central Electricity Regulatory Commission last year ordered wind farms to predict their day-ahead generation within a 30 percent band. Developers including Tata Power (TPWR) Co. and Goldman Sachs Group Inc.’s ReNew Wind Power Pvt. protested the directive, saying it was impossible to comply with and that penalties would wipe out profits in an industry that has drawn about $10 billion of investment since 2011.

“Not a single project has been able to produce data within the margins,” Jain said in an interview in New Delhi this week. “It defeats the purpose. It’s too inaccurate.”

Gireesh Pradhan, chairman of the Central Electricity Regulatory Commission, wasn’t available to comment by phone and didn’t respond to an e-mail.

Forecasting of wind generation, an intermittent energy source, is carried out to help stabilize the grid in some parts of the U.S. and Europe, where surging wind output has driven wholesale electricity prices below zero and forced utilities to pay consumers to take power as supply exceeded demand. In India, scheduling would allow wind power to be sold across states and help authorities prepare network upgrades to accept more clean energy in the future.

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What went wrong with L & T’s Rajpura Thermal project ?

What went wrong with L & T’s Rajpura Thermal project ?

The move of Larsen and Toubro Ltd (L&T), India’s largest construction and engineering company to sell its 1400 MW Rajpura thermal plant comes as a shock and speaks volumes about the hollowness of the pro industry policies of Punjab Government and working of the Investment Promotion Group.
The official reason for sale of power plant is its plan to divest assets not central to its main businesses, however the actual reasons may be unforeseen day to day problems .Few years ago when L & T made a bid for thermal plant it was very enthuastic about the project.
The projected cost overrun and its failure to get anticipated profits may be among the reason to sell the project even at loss. PSPCL’s inability to take full power generation from this supercritical plant may be one of the reasons. PSPCL will be paying capacity charges only when plant is not running.
PSPCL is forcing L&T to generate power in the range of 600 MW in daytime and reduce it to around 200 MW during night. It is affecting the boiler life very badly as this being a super critical unit, should run on constant load for best performance and economy. The company is losing about Rs. 2.5 crore per day on account of this.
The railway track to the plant is incomplete due to a court case instituted by a farmer at the instigation by an opposition party MLA who never wanted the ruling party to take the credit of development.
The cost of transportation of coal by trucks from Mandi Gobindgarh to the site of plant and non passing of cost of washing of coal are other irritants
L&T has also been facing problems on account of non passing of benefits for declaring it as Mega Project. The reported loss may be to the tune of Rs. 500 crore. Other benefits not granted includes non compensation of cost to the tune of Rs. 50 crore due to change of site to seismic zone ,non compensation of cost amounting to Rs. 178 crore for dedicated railway corridor.
L&T being a professional company is fed up of all these issues emerging out of negative attitudes prevailing in Punjab Government and PSPCL and thus plans to sell the thermal plant at a loss of more than Rs. 2000 crore.
The Rajpura Thermal plant executed at a total cost of around Rs.9, 600 crore may fetch anything between Rs. 7000 crore to 7700 crore as each megawatt can fetch Rs. 5 crore to 5.5 crore in open market. L & T is projecting a loss of Rs. 2000 crore on the sale of project.
A leading Industrialist from Punjab remarked that L&T plan to walk out of Punjab proves that no honest professional group can survive the inefficiency of the state government and PSPCL He said that while industrialists are treated like gods in Madhya Pradesh and Gujarat, they are dragged in Punjab to face red tapes and legal battles. These have contributed to make Trident and Nahar groups to shift their expansion plans to MP.
It may be mentioned that CERC had carried out a comparative analysis of 14 thermal projects in 2010 that had been awarded under competitive bidding. In case of Rajpura thermal the CERC assessed that the cost plus levelised tariff would be Rs 3.4822 per unit as against the bid rate of Rs 2.89 per unit. CERC had assessed the capital cost of Rajpura project as Rs 6862 Crore. This indicates that L&T figure of Rs 9600 Cr is highly inflated and is being publicized so as to fetch a higher sale price for the project.

NTPC to be most hurt by new power tariff order, says Fitch

NTPC ,India’s largest thermal power generator, would be the most hurt among the country’s rated state-linked electricity utilities by the Indian electricity market regulator’s final tariff order for the upcoming five-year regulatory period from April 2014 to March 2019, Fitch Ratings says in a report.

There is limited impact on the other two rated power utilities which are NHPC Limited and Power Grid Corporation of India Ltd(PGCIL), which are both rated at ‘BBB-’ with Stable Outlooks.

Fitch estimates that the new tariff order by the Central Electricity Regulatory Commission (CERC) would reduce NTPC’s pre-tax return on equity by around 350 bps. As a result, Fitch will trim its estimates for the company’s EBITDA and profit after tax (PAT) from the financial year ending March 2015 (FY15) onwards by around 8%-11%.

The weaker returns arising from the tariff order means NTPC’s net leverage would be higher than previously expected. NTPC’s net leverage was expected to increase over the next few years due to its large capex programme.

While this will not have an impact on NTPC’s current ‘BBB-’ ratings, which are constrained by India’s ratings of ‘BBB-’ with Stable Outlook, it will however reduce the rating headroom of its unconstrained standalone rating of ‘BBB’, says Fitch.

For thermal generation companies including NTPC, the threshold for full receipt of the capacity charge continues to be linked to a minimum plant availability factor (PAF), which has been cut to 83% for the first three years of the next control period from 85% previously, which will help reduce disincentives in certain plants.

However, NTPC’s profitability will be further reduced because incentives for thermal generators in the next regulatory period will be based on companies reaching a plant load factor (PLF) of at least 85%, rather than the PAF.

PLF is dependent on the ability of the state electricity distribution companies’ ability to offtake power from the plants. NTPC’s coal-based power plants had an average PLF of 83% in FY13, with 10 of its 15 coal-based plants having PLFs of less than 85 per cent.

The coal-based plants’ PLF further fell to 79% for the nine months ended December 2013, implying that even fewer of NTPC’s plants would qualify for the incentives. None of NTPC’s seven gas-based plants have PLFs over 85 per cent.

Furthermore, the CERC has tightened certain operational standards and required sharing of cost benefits with power distributors. Fitch expects that the profitability of NHPC and PGCIL to fall only by 2%-4% from FY15.

As such, their forecast credit metrics will remain largely unchanged from the agency’s previous expectations. NHPC and PGCIL would remain relatively immune to the change in the tax used to calculate pre-tax return on equity as they use the MAT rate.

NHPC’s incentives would still continue to be linked to normative plant availability factor, although the CERC has raised the factor for three out of NHPC’s 14 plants. PGCIL’s incentives are linked to the transmission system availability factor, which has been increased to 98.5 per cent (from the earlier 98%) for alternating-current systems and 96 per cent (95% previously) for high-voltage direct-current systems.

Source: Economic Times

CERC shifts to plant availability factor under ’14-19 tariff norms

Despite strong opposition from NTPC, power sector regulator has shifted the incentive structure to plant load factor from plant availability factor

Shares of NTPC Ltd hit a five-year low, as the Central Electricity Regulatory Commission further tightened its noose on operating norms for power generation companies in its 2014-19 (Apr-Mar) tariff structure.

India’s largest power generation company’s shares closed at Rs 116.90 on the NSE, down 11.7% while Power Grid was down 0.40 per cent at Rs 94.75.

CERC, in its final guidelines for tariff fixation released Saturday, has shifted the incentive structure to plant load factor from plant availability factor in the previous norm for the period 2009-2014 (Apr-Mar). The regulator also maintained the base return on equity on transmission systems at 15.5%, which is much lower than 18-20% sought by companies.

In its draft regulations released in December, the commission had suggested an incentive linked to plant load factor of a power unit, which was strongly opposed by the industry, especially by the biggest player NTPC. Plant availability factor in relation to a generating station for any period means the average of the daily declared capacities for all the days during the period.

On the other hand, plant load factor for a thermal generating station or unit for a given period refers to the total sent out energy corresponding to scheduled generation during the period.

NTPC had argued saying PLF was beyond a power company’s control and had requested the regulator to go back to the incentive linked to PAF. The commission has also brought down the PAF threshold for availing the incentive to 83% from 85% earlier.

“NTPC would be worst hit due to across-the-board cut in its incentive grossing up of tax on actual tax paid v/s applicable tax rate to hit NTPC,” global brokerage firm Bank of America Merrill Lynch said in a report.

“Provided that in view of shortage of coal and uncertainty of assured coal supply on sustained basis experienced by the generating stations, the NAPAF (Normative Plant Availability Factor) for recovery of fixed charges shall be 83% till the same is reviewed,” the regulator said.

Incentives based on PLF would depend on actual power generation, a scenario that could result in lower income.  However, in a move that would be a major disadvantage for NTPC, the commission has retained its decision to remove the tax arbitrage that existed when companies like NTPC charged a higher tax rate from its customers leading to a tax arbitrage for NTPC alone at around 5 bln rupees a year.

Norms for 2009-14 allowed utilities to retain tax benefits applicable to power projects by recovering higher tax from beneficiaries than the actual income tax paid. However, the new norms limit the recovery of tax to the actual tax paid by utilities.

“…the effective tax rate shall be considered on the basis of actual tax paid in the respect of the financial year…The actual tax income on other income stream (i.e., income of non-generation or non-transmission business, as the case may be) shall not be considered for the calculation of ‘effective tax rate’,” the commission noted.

Opposing the move in the draft regulation, NTPC had argued saying its new projects planned in the coming years as per their power purchase agreements signed with different beneficiaries requiring investment of around 4.80 trln rupees would be adversely affected.

Other key regulations include a ‘special allowance’ for coal and lignite based power plants that could be availed and following which the revision of capital cost would not be allowed and applicable operational cost shall not be relaxed.

“In case of coal-based/lignite fired thermal generating station, the generating company, instead of availing R&M may opt to avail a “special allowance…as compensation for meeting the requirement of expenses including renovation and modernisation beyond the useful life of the generating station or a unit thereof, and in such an event, revision of the capital cost shall not be allowed and the applicable operational norms shall not be relaxed but the special allowance shall be included in the annual fixed cost,” the regulator said.

It added the special allowance would be 750,000 rupees per megawatt a year for 2014-15 (Apr-Mar) and would be escalated at 6.35% every year during the tariff period till Mar 2019.

- See more at: http://freepressjournal.in/cerc-shifts-to-plant-availability-factor-under-14-19-tariff-norms/#sthash.2MVwyZh6.dpuf

Government panel did not carry out in-depth probe on grid failure

NEW DELHI; The government panel did not carry out “in depth” investigations into the technical issues that caused the failure of electricity grids in July 2012, power sector watchdog CERC has said.

It has called for detailed analysis of the incident, saying that several states had failed to comply with norms.

CERC’s observations come over 18 months after the massive collapse of grids that affected power supplies to about half of the country’s population. Overdrawal of electric ..

Read more at:
http://economictimes.indiatimes.com/articleshow/30956712.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Haryana to pay more for power purchase from Adani & Tata

Haryana to pay more for power purchase from Adani & Tata
Sunday February 23 2014
Chandigarh

The purchase of 1424 MW by Haryana from Adani’s Mundra thermal plant in Gujarat has become costly after Central Electricity Regulatory Commission (CERC) allowed compensatory tariff for increase in cost of imported coal from Indonesia.
CERC in its decision of February 21 on petition no.155 of 2012 has granted compensation to Adani Power for higher costs of Indonesian Coal. Haryana has to pay Rs. 409.51 crore as compensation for the period up to March 31 2013 in thirty six installments . The compensatory tariff for the current financial year is likely to be 62 paise per unit .
There may be reduction on this if Adani sells power on merchant basis if the power generation exceeds 80% and profits are shared with Haryana. Assuming a share of 19 paise in income from merchant sales, Haryana would have to pay minimum 43 paise more for one unit of power. The compensatory tariff mechanism for both the power plants will be reviewed after three years.
Adani Power has signed two power purchase agreements in August 2008 with Haryana utilities — Uttar Haryana Bijli Vidyut Nigam Ltd and Dakshin Haryana Bijli Vidyut Nigam Ltd for the supply of 1,424 MW of power for 25 years. The power from unit 1 started on August 7 2012 and from unit 2 &3 from February 7 2013.
Haryana Government has proposed no tariff hike for the power consumers of the state in election year as it has agreed to financial restructuring plan of Government of India. It will interesting to see how this is passed on to consumers under the grab of fuel adjustment charges after the elections.

Last April, while allowing a hike in tariffs for the two projects, CERC had set up a panel headed by Deepak Parekh to work out compensatory tariffs to mitigate the adverse impact of higher prices of imported coal.
Besides reduction in interest rates, CERC has r also recommended extending a moratorium on principal repayment for two-three years and an extension in the loan repayment period and to approach appropriate authorities in this regard.

The CERC’s recommendations were based on the suggestions of the Deepak Parekh committee set up last year to arrive at compensatory rates for the two imported coal-based power plants of Adani and Tata Power at Mundra, Gujarat.
In a similar order by CERC issued on Friday the purchase of 3800 MW by Punjab Haryana Rajasthan, Maharashtra and Gujarat from Tata’s Mundra UMPP in Gujarat has become costly after Central Electricity Regulatory Commission (CERC) allowed compensatory tariff for increase in cost of imported coal from Indonesia. All the five procurer states has to pay Rs. 329.45 crore in the ration of their share as compensation for the period up to March 31 2013 in thirty six installments . The compensatory tariff for the current financial year is likely to be 52.40 paise per unit .
Punjab has 12.5 % share in Project ,Haryana & Rajasthan have 10 % share each, Maharashtra 20% and balance 47.5% is for Gujarat

Salient points of deviation and settlement mechanism applicable from 17.02.14

 

1. Deviation Price Vector:

A. Deviation Charge:

Hz

Paise/KWh

Hz

Paise/KWh

Hz

Paise/KWh

Hz

Paise/KWh

50.05

0

49.96

261.36

49.87

448.92

49.78

636.48

50.04

35.6

49.95

282.2

49.86

469.76

49.77

657.32

50.03

71.2

49.94

303.04

49.85

490.6

49.76

678.16

50.02

106.8

49.93

323.88

49.84

511.44

49.75

699

50.01

142.4

49.92

344.72

49.83

532.28

49.74

719.84

50

178

49.91

365.56

49.82

553.12

49.73

740.68

49.99

198.84

49.9

386.4

49.81

573.96

49.72

761.52

49.98

219.68

49.89

407.24

49.8

594.8

49.71

782.36

49.97

240.52

49.88

428.08

49.79

615.64

49.7

803.2

B. Analysis:

Each step of frequency is 0.01 Hz and

a.At 50.00 Hz: 178 paise/KWh

(Median value of avg energy charge of coal/lignite stations regulated by CERC in last 6 months period).

b.    Below 49.7 Hz: 824.04 paisa/KWh

(Highest of avg ECR of stations regulated by CERC in last 6 months period

c. At and above 50.05 Hz: 00.0 paisa/KWh

d. From 50.05 to 50.00 Hz each step 35.6 paisa/KWh

(Evaluated in each step of frequency from rate at 50.05 Hz and rate at 50.00 Hz on pro-rata as above)

e. From 50.00 to 49.70 Hz each step 20.84 paisa/KWh

(Evaluated in each step of frequency from rate at 50.00 Hz and rate at below 49.70 Hz on pro-rata as above)

f. At 49.7 Hz: 803.2 paisa/KWh

Note:  

1. Last six months to be Jan to June or July to Dec or any other 6 months if deemed necessary.

2. Charge to be reviewed from time-to-time.

 

2. Permissible Deviation (PD):

  • 12% of schedule or, 150MW whichever is less.
  • Permissible deviation shall be applicable at the inter-State boundary of the respective State.
  • Deviation charge of

A. Under drawal for excess of PD to be 0.

B. Over-Injection for excess of PD to be 0 except infirm power.

 

3. From Buyer/Beneficiary point of view:

  1. Permissible deviation shall not exceed when grid frequency is 49.7 Hz and above.
  2. No overdrawal permissible when grid frequency is below 49.70 Hz.
  3. Overdrawal possible only when grid frequency is “49.70 Hz and above”.

4. From Seller/Generator point of view:

  1. Permissible deviation shall not exceed when grid frequency is 49.7 Hz and above.
  2. No underinjection permissible when grid frequency is below 49.70 Hz.
  3. No overinjection permissible when grid frequency is 50.10 Hz and above.
  4. No volume limit for infirm power.
  5. No volume limit for drawal before COD when grid frequency is 49.7 Hz and above.
  6. F.    Cap rate for Infirm power:

1. Domestic coal/ Lignite/Hydro: 1.78/KWh.

2. APM gas: 2.82/ kWh upto 31.03.14 thereafter 5.64/ kWh.

3. Imported Coal: 3.03 / kWh

4. RLNG: 8.24 / kWh

  1. Cap rate for deviaton by genarator under APM is 303.04 paisa/KWh. Cap rate should coincide with ECR on Imported coal. Cap rate to be removed from 01.04.14.

 

5. Additional charge for deviation (Seller/Buyer):

I.        When 12% of schedule<=150MW (Underinjection/Overdrawal):

a. 12% of schedule<Underinjection/Overdrawal <=15% of schedule:

i.        20% of deviation price vector in the time block for all, except for stations under APM

ii.        20% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

b. 15% of schedule< Underinjection/Overdrawal <=20% of schedule:

i.        40% of deviation price vector in the time block for all, except for stations under APM.

ii.        40% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

c. 20% of schedule< Underinjection/Overdrawal:

i.        100% of deviation price vector in the time block for all, except for stations under APM.

ii.        100% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

                                   II.        When12% of schedule>150MW (Underinjection/Overdrawal):

a. 150MW< Underinjection/Overdrawal <=200MW:

i.        20% of deviation price vector in the time block for all, except for stations under APM.

ii.        20% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

b. 200MW< Underinjection/Overdrawal <=250MW:

i.        40% of deviation price vector in the time block for all, except for stations under APM.

ii.        40% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

c. 250MW< Underinjection/Overdrawal:

i.        100% of deviation price vector in the time block for all, except for stations under APM.

ii.        100% of the Cap rate for Deviations of 303.04 Paise/KWh or the Charge for Deviation corresponding to average grid frequency of the time block, whichever is less for stations under APM.

III.        When Frequency <= 49.70Hz (Underinjection/Overdrawal):

a. Deviation Charge of “below 49.7Hz” for all, except for stations under APM.

b. 100% of cap rate for deviation i.e., 303.04 paisa/KWh for plant under APM fuel.

IV.        When Frequency >= 50.10Hz (Over-Injection/Underdrawal): Deviation Charge at 50Hz.

 

Author: Mr. Sunil Barnwal is currently working as Manager in Reliance Energy Limited (BSES). He has rich experience in Power Market with functional expertise in the concept of Effective Management of power purchase portfolio, PPAs (Contract negotiation and analysis of agreement clause)Strategic planning of Existing/New Regulation of CERC/ DERC. He is also involved in Negotiation, Validation and overall analysis of Long/Short term Power Purchase. He can be reached at sunilbarnwal@gmail.com.

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