Regulatory Insights

About Regulatory Insights

CER publishes a quarterly newsletter titled "Regulatory Insights", which brings insights into key national and state-level regulatory and policy development in the Indian Power Sector, accompanied with opinions based on CER's Regulatory Database analysis. This would assist policymakers and regulators in taking appropriate initiatives to strengthen the Regulatory Research and Network in the Power Sector, create a conducive environment for investment, and meet the green growth aspirations for the sector.

Newsletter Particulars

Title:	Regulatory Insights
Frequency:	Quarterly
ISSN:	2583-2182 (O)
Publisher:	Centre for Energy Regulation (CER)
Editor:	Prof. Anoop Singh
Copyright:	© Copyright 2024 Center for Energy Regulation, IIT Kanpur \| All Rights Reserved
Starting Year:	2018
Subject:	Multidisciplinary
Language:	English
Publication Format:	Online and Printed
Email ID:	cer@iitk.ac.in
Website:	https://cer.iitk.ac.in
Address:	Centre for Energy Regulation (CER), Department of Management Sciences (DoMS), IIT Kanpur - 208016

Members

                        

                      
Prof. Anoop Singh
Professor
Department of Management Sciences
Indian Institute of Technology Kanpur
anoops@iitk.ac.in 
  Profile 

                        

                      
Prof. Jean-Michel Glachant
Director
Florence School of Regulation
European University Institute Florence
jean-michel.glachant@eui.eu
  Profile 

                        
                      
Prof. Tooraj Jamasb
Director
Department of Economics
Copenhagen School of Energy (CSEI)
tj.eco@cbs.dk
  Profile 

                        
                      
Prof. Ajay Pandey
Professor
Finance And Accounting
Indian Institute of Management Ahmedabad
apandey@iima.ac.in
  Profile 

                        

                      
Dr. Ankush Sharma
Associate Professor
Department of Electrical Engineering
Indian Institute of Technology Kanpur
ansharma@iitk.ac.in
  Profile 

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Volume 06

                          
 Vol 06 Issue 04 (Apr 24)                      

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 Vol 06 Issue 03 (Jan 24)                      

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 Vol 06 Issue 02 (Oct 23)                      

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 Vol 06 Issue 01 (Jul 23)                      

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MPERC (Approach Paper on Methodology for Estimation of Electricity Generated from Biomass in Biomass Co-fired Thermal Power Plant) [Draft]The objective of the paper is to mandate the state sector coal-based thermal power plants whose tariff is determined by
                                            the Commission u/s 62 and u/s 63 of the Electricity Act 2003 (The Act) and moreover the captive power plants to use
                                            biomass pellets along with coal.                                             
                                            
All coal based thermal power plants with “bowl mill” to mandatorily use 5% blend of biomass pellets, with “ball &
                                                race mill” to mandatorily use 5% blend of torrefied biomass pellets only and with “ball & tube mills” to mandatorily
                                                use 5% blend of torrefied biomass pellets with volatile content below 22%, on annual basis primarily of agro residue
                                                along with coal.                                                
                                                
The generating utilities with some units under reserve shutdown or not being despatched due to Merit Order Despatch
                                                    (MOD) consideration, shall increase the percentage of co-firing up to 10% in their other operating units/ plants (5% in
                                                    case of ball and tube mills).
                                                    
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Volume 05

                          
 Vol 05 Issue 04 (Apr 23)                      

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Brif Overview of the Hon'ble Supreme Court Order on Civil Appeal No. 1933 of 2022Appellate Tribunal For Electricity (APTEL), by its judgment dated 18 February, 2022, dismissed an appeal u/s 111 of the
                                            Act instituted by TATA Power Company Limited Transmission (TPC-T) against a decision of Maharashtra Electricity
                                            st Regulatory Commission (MERC) dated 21 March, 2021. 
                                            
On 21 March, 2021, MERC granted a transmission license to Adani Electricity Mumbai Infra Limited (AEMIL) u/s 14
                                                and 15 of the Act for setting up a 1000 MW HVDC (Voltage Source Converter based) link between 400 kV Maharashtra
                                                State Electricity Transmission Company (MSETCL) Kudus and 220 kV Adani Electricity Mumbai Limited (AEML)
                                                Aarey EHVStation. 
                                                
TPC-T challenged MERC's order before APTEL, inter alia, on the ground that the grant of the license was not preceded by
                                                    a Tariff Based Competitive Bidding (TBCB) process. TPC-T contended that the failure to adhere to a TBCB process
                                                    pursuant to Section 63 was contrary to public interest and statutory mandate. APTELdismissed the appeal. This has given
                                                    rise to a statutory appeal u/s 125 of the Act.
                                                    
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 Vol 05 Issue 03 (Jan 23)                      

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 MNRE National Repowering Policy for Wind Power Projects, 2022 [Draft]Repowering Potential: NIWE has estimated repowering potential of the country to be 25406 MW considering wind                                             turbines of capacity below 2 MW.                                             
Repowering Project:The capacity of the wind turbine will be enhanced by 1.5 times the aggregate capacity of old turbines. Repowering projects                                                 are classified into two types - Standalone and Aggregation Projects.                                                 

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 Vol 05 Issue 02 (Oct 22)                      

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MPERC(Power Purchase and Procurement Process) Regulations, Revision-II, 2022 [Draft]Framework for Power Procurement Planning:: The distribution licensee shall submit the power procurement plan for a                                             st time period aligned with control period of MYTRegulations (5-year rolling plan) and every year after that, on or before 31                                             July, in the prescribed format.                                                                                          
Variation in PowerPurchase:The distribution licensee may procure additional power during the year over and above the                                                 power procurement plan in case of unanticipated increase in demand or shortage in supply or in case of emergency                                                 conditions to maintain grid stability.                                                 
Making Information Available to Public:The monthly/ weekly/ day-ahead/ intra-day power procurements/ sale done by                                                     the licensees and generator schedule shall be made available on the websites of the licensees and SLDC within 30 days of                                                     such procurements/ sale with ease of access to the current as well as archived data. SLDC shall also publish the monthly                                                     MoD stack along with per unit variable cost of each generating station in their website.                                                     
Dedicated Cell:Around the clock dedicated cell shall be constituted by the distribution licensees within three months from                                                         the Regulation coming into force. The cells should have the requisite capability and tools for energy forecast. The cell shall                                                         have the power to purchase/ sell the energy in real-time, intra-day, day-ahead, week ahead or any longer duration through                                                         Power Exchanges or any other means. The licensees shall frame suitable guidelines for the modus operandi of the                                                         dedicated cell in line with the spirit of this Regulation and shall apprise the Commission for the same within 45 days from                                                         the coming into force of this Regulations.                                                         

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 Vol 05 Issue 01 (Jul 22)                      

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WBERC (Open Access) Regulation, 2022 [Draft]Extent of Application:These Regulations shall be applicable for consumers drawing power from any non-captive                                             generator without the use of intra-state transmission lines, or distribution network, such arrangement, including                                             scheduling, determination of cross-subsidy surcharge, additional surcharge, distribution access charge, etc. Such                                             customers shall ensure proper metering to record the generator's energy supply.                                             
Eligibility forOpen access:Consumers intending to avail Open-access must have existing connectivity with the concerned transmission or                                                 distribution licensee. Applicant may submit the application for Long-Term connectivity with the application seeking                                                 Long-Term Open-access.                                                 
The customer availing Open-access will have to indicate the potential hazards concerning public safety through a                                                     declaration to the SLDC. The consumer will be listed as Open-access customer from different sources for Emergency                                                     Power after considering by SLDC.                                                                                                                                                              
The applicant may reduce its requirement of transmission during congestion and inform the Nodal Agency by the 24 day                                                         of the month preceding the month from which short-term Open-access is to be availed.                                                         

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Volume 04

                          
 Vol 04 Issue 04 (Apr22)                      

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CERC Guidelines for Registration and Filing Application for Establishing and Operating Over the Counter (OTC) Platform [Draft] .Registration for the operation of OTC Platform:Entities shall not operate the OTC Platforms unless registration                                             has been granted under the Power Market Regulations (PMR), 2021.                                             
Registration for the operation of OTC Platform:Form-I shall be filed along with the application fee as specified in the Fee Regulations.                                                 The application shall be published along with details as per Form-II, inviting suggestions for up to 30 days, and replies                                                 shall be submitted on the suggestions received.                                                 
Grant of Registration:The non-transferable registration shall be in force for five years from the date of grant, unless                                                     it is revoked or cancelled earlier. The Commission may renew the registration for a further five years at a time, after                                                     making necessary inquiries.                                                                                                          
Annual Registration Charge:Annual registration charge to be payable by the 30 of April every year as per the                                                         Payment of Fee Regulations.                                                         

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 Vol 04 Issue 03 (Jan 22)                      

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Draft Electricity (Rights of Consumers) Amendment Rules, 2021.                                         DISCOMs shall ensure 24x7 uninterrupted power supply to control pollution levels by avoiding usage of DG sets                                             particularly in metros and large cities.                                              
Consumers for whom DG sets are essential for backup power, shall endeavour to shift to clean sources, i.e., RE with                                                 battery storage etc., within 5 years from the date of publication of the amendment, or as per timelines set by SERC for                                                 such replacement based on supply reliability of the DISCOMs.                                                 
To avoid usage of DG sets for temporary activities, electricity supply procedures for construction or for other                                                     temporary usages shall be simplified and given on an urgent basis within 48 hours of application. Aprepaid meter will                                                     be used for a temporary supply.                                                     

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 Vol 04 Issue 02 (Oct 21)                      

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Draft Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules , 2021.                                         Applicability:This rule will be pertinent to green energy purchase and consumption including energy generated via                                             Waste-to-Energy plant.                                             
Renewable Purchase Obligation (RPO):: There will be uniform RPO for all obligated entities (i.e., the distribution                                                 licensees, open access and captive power consumers).                                                 
Green Energy Open Access:The appropriate Commission shall prepare regulations in line with this Rule to provide                                                     Green Energy Open Access to consumers who want to use it. The Consumers, except captive consumers, having                                                     contracted demand/sanctioned load of 100 kW and above shall be eligible to take power through green energy open                                                     access.                                                     
Banking: Banking may be allowed on a monthly basis on payment of charges to compensate additional costs to the                                                         distribution licensee incurred by the Banking. The amount of banked energy by Green Energy Open Access                                                         consumers should not exceed 10% of the Consumers' total yearly energy consumption from the distribution licensee.                                                         
Cross Subsidy Surcharge:: Cross Subsidy Surcharge and Additional Surcharge shall not be applicable for power that                                                             is produced from the Waste-to-Energy plant.                                                             

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 Vol 04 Issue 01 (July 21)                      

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MoP: National Electricity Policy, 2021 [Draft]                                         Promotion of clean and sustainable generation of electricity.
Development of an adequate and efficient transmission system.
 Revitalization of DISCOMs.
Development of efficient markets for electricity.
Supply of reliable and quality power of specified standards in an efficient manner.                                                         
To move towards light-touch regulation.                                                         

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Volume 03

                          
 Vol 03 Issue 04 (Apr 21)                      

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MoP: Implementation of Budget Initiatives for the Power and         Renewable Energy Sector         A framework will be planned to promote competition among DISCOMs and give consumers options to choose from             more than one distribution company.
A reform-based result-linked power distribution sector scheme will be launched that provide assistance to improve                 the financial viability of DISCOMs.
The government has announced the Production Linked Incentive (PLI) scheme for 13 key sectors to possess core                     competence and cutting-edge technology. For this initiative, the government has committed more than 1.9 lakh crore                     over five years.
It is proposed to promote the comprehensive National Hydrogen Energy Mission in 2021-22 for generating hydrogen                         from green power sources.
An additional capital infusion will be provided to SECI (1000 Cr.) and IREDA (1500 Cr.) to upsurge the nonconventional energy sector.                         

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 Vol 03 Issue 03 (Jan 21)                      

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Electricity (Change in Law, Must-run status, and other Matters) Rules, 2020 [Draft] Adjustment in Tariff on Change in Law:                                   The appropriate Government may prescribe a formula by notification as per formula declared in the Electricity(Change in Law, Must-run status, and other Matters) Rules, 2020 by Mop, if the formula for compensation has not included in PPA/PSA agreement or bidding document. 
 Pass-through will come into effect, automatically after 30 days of the Change in Law event. Within 30 days of the pass-through comming into effect, the Generator/Intermediary Procurer will submit the pertinent documents/calculation to the appropriate Commission for truing up the rate of pass through per unit.
The appropriate Commission will verify the calculation and do the truing up within 60 days of the pass through comming into effect after which the rates of pass-through will be adjusted, if necessary, according to the truing up.
                                  
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 Vol 03 Issue 02 (Oct 20)                      

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 JSERC (Terms and Conditions for Determination of Generation Tariff) Regulations, 2020 [Draft] Applicability: 1st April, 2021-31st March, 2026                                    
 Definition for Pumped storage hydro generating station has been introduced.                                   
 The Commission will adopt the MYT Framework for approval of ARR and determination of tariff, and ARR shall be determined for each year of the control period .                                 

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 Vol 03 Issue 01 (Jul 20)                      

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  CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2020 [Draft] RoE: Pre-tax vs Post-tax (Section 19):                                      Clause 2 of Section 16 should be modified as –“The normative Return on Equity shall be 14%, to be grossed up by prevailing rate of Minimum Alternate Tax (MAT), as on 1 April preceding the CoD, for the entire Tariff Period”. (underlined text to be included)
The cost on equity estimated by the CAPM approach is a post-tax estimate. A recent study at CER, IITK using CAPM and multi-factor models using a comprehensive data for over 125 infrastructure companies between 1998-2018, estimates the cost on equity for RE sector to range between 12.87-16.58%, on a post-tax basis. The estimate referred to in the Statement of Reasons (SoR) is also a post-tax estimate. Against the estimated post-tax cost of equity of 12.87% (using CAPM), the proposed RoE works out to 16.96% (after grossing up with 15% MATplus 12% surcharge, and 4% cess)
                                    
 IoWC vs IoL: Difference between Interest on Working Capital (IoWC) and Interest on Loan (IoL) is 150 bp. Given the observed difference in yield of short-term and long-term government securities, the interest rate differential may be made dynamic and linked to the prevailing short-term and long-term yields.                                     
 Rebate on Early/Advance Payment: Given the dynamics in the financial markets, rebate on early payment may also be linked to SBI MCLR. Additionally, provision for 'advance' payment may also be incorporated.                                   
 Hybrid RE Projects: Clarification regarding scope of Hybrid RE projects vis-a-vis their definition in case of more than two technologies is needed. Further, mentioning if Co-generation with Hybrid RE technology would also fall within the scope                                   
 Storage in RE and Hybrid RE Projects Scope: It will be useful to clarify scope of storage based RE (Hybrid) projects vis-a vis minimum storage capacity with respect to the rated 'energy' capacity of the RE plants. Further, it                                   should be clarified if co-generation with storage technology would also fall within the scope would be useful.
 Electricity Act, 2003 Amendment 2020 [Draft]  Standard Guidelines for Distribution sub-licensee (DSL) and franchisee.                                   
 PPAallocation to DSL.
 National Renewable Energy Policy                                    

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Volume 02

                          
                        
 Vol 02 Issue 04 (Apr 20)                      

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 CERC: Determination of Forbearance Price and Floor Price for the REC Framework As the proposed REC floor price for so1ar/non-solar RECs is zero, reference to floor price as a part of REC framework under the principle REC Regulations may be amended.                                    
 As the floor price and forbearance price for both solar and non-solar technologies are proposed to be uniform, it is an appropriate time to merge solar and non-solar REC markets.                                    
 Given that SERCs are allowing excess solar(non-solar) RPO quantum to be adjusted against non-solar(solar) RPO, fungibility between solar and non-solar RECs is clearly visible and should be institutionalised.                                   
 APERC (Terms and Conditions of Open Access) Second Amendment Regulation, 2o20  Consonance with the Electricity Act 2003: Removal of the preferential benefit to RE based generation and open access (OA) would not be in line with the Section 86 of the Electricity Act2003.                                   
 Making RE more Accountable to the Grid: Given the intermittency issues with increasing RE injection, which can be addressed by improving forecasting techniques for RE resources along with gradual tightening of deviation settlement mechanism can help ameliorate this impact to some extent. Further, to limit the impact of variability and intermittency, strict band for forecasting error and the associated deviation penalty structure could be adopted under APERC (Forecasting, Scheduling and Deviation Settlement) Regulation, 2017.                                   
 Role of Storage: The enhanced framework for RE forecasting and penalty deviation would also provide room for innovation and adoption of grid connected storage, as they become more economical in future..                                   
 GERC: Tariff Frameworlx for Procurement of Power by DISCOM and Others from Solar Projects                                     and Other Commercial Issues                                    Regulatory Lag in Determining Tariff: Regulated tariff determination often lags to follow the competitive one due to the inherent nature of the regulatory process and the dynamic market situation. Decline in the competitively determined solar bids needs to be reflected in the regulated prices once feasible. Linking of the ’regulated’ price for projects below 5 MW to the competitively derived one would address the underlying lag.The discussion paper lacks sufficient clarity due to multiple confounding statements. Nevertheless, CER concludes that the tariff for the projects below 5 MW is to be linked to the competitively determined tariff for projects above 5 MW during the previous six months (as per defined block of months).                                   
 Diseconomies of Scale for Small Projects: Small projects (below 5 MW) have significant diseconomies of scale leading to high cost of installation, financing as well as operation and maintenance (O&M) cost. A decline in tariff for larger projects has primarily been on account of decline in the project cost and the financing costs. Smaller projects have proportionately smaller share of Engineering Procurement and Construction (EPC) cost as compared to larger ones. Hence, a decline in competitively bid prices are not directly replicable for smaller projects.                                   
 Linking Regulated Tariff to Competitively Determined Prices: The mark-up between the feed-in-tariffforlarger (> 5 MW) and smaller(ñ 5 MW) Solar PV projects is about 24%. The tariff for small solar PV projects can be pegged a bit higher than the prevailing mark-up, which should be gradually reduced in future to enable project developers to adopt innovative procurement, financing and project management practices.
                                     The 'estimated' regulated price for smaller projects (5 MW) for 2017 (T3.27) would have been less than half of the regulated price. The mark-up relationship may not be linear and,hence, needs to be studiedlater.                                    
 An Alternate Solution - Competitive Market for Smaller PV Projects: Considering, the uncertainty associated with the mark-up relationship between regulated and competitively determined tariff, the aim should be to nurture a competitive market by bundling a large number of small scale projects deriving economies of scale in procurement, financing and implementation.                                   

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 Vol 02 Issue 03 (Jan 20)                      

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 MoP: Pre-Payment in the Entire Value Chain of Power Sector  Pre-paid metering is generally adopted to safeguard vulnerable consumers against exceeding their energy budget, and for consumers with poor payment record, the latter being a dominant driver in the Indian context. Phased implementation of pre-paid smart meters, targeting distribution areas with high technical and commercial losses, would bring in greater upfront benefits. In the case of utilities/areas with high collection efficiency, net gains for the distribution utilities and the consumers, estimated on the basis of a cost-benefit analysis, should drive wider adoption.                                   
 Financial Impact of Pre-paid Electricity Supply Chain - CER’s quick calculations based on cost structure, rebate on pre-payment and cost of interest on working capital across the electricity supply chain for UP DISCOMs, reveal that any gap resulting from difference in rebate on payment and saving on interest on working capital would be compensated through the truing-up exercise, thus limiting the benefit for the sector. Consumers would benefit on account of pre-payment rebate and, saving on interest on security deposit, if any. Replacement of existing electronic meters,  whose  economic  and  technical  life  is  yet  to  be  reaped,  would  place  additional  financial  burden  on DISCOMs.                                    
 Apart  from  rebate  for  pre-payment,  pre-paid  consumers  would  also  expect  refund  of  security  deposit  unless regulatory provisions allow for continuation of payment of interest on such security deposits.                                   
 Long-term sustained benefits of pre-paid smart metering would also depend on the development of a smart grid ecosystem. Implementation of a consumer demand response program and increasing the ambit of ToD pricing would further help in monetising additional benefits of pre-paid smart meters.                                   
 Further, the consumer's expectations for rebate on pre-payment are likely to be higher to entice their interest. This may not be financially sustainable for the utilities. Wider pre-paid metering should not reduce consumer interface as it not only helps the DISCOMs in providing better customer service but also helps in identifying meter bypassing undetectable to the pre-paid smart meters.                                   
 MoP: Revised EV Charging Infrastructure Guidelines  Tariff determination for EV charging infrastructure should either be based on a generic tariff to be determined by the respective SERC or based on a competitive bidding exercise.                                   
 In the absence of any specific guidelines, operationalizing the 'priority' for installation of public charging stations given  to  existing  retail  outlets  of  oil  marketing  companies  would  be  difficult  and  may  result  in  restrictive environment for the new entrants.                                   
 CERC: Draft Methodology for Estimation of Electricity Generated from Biomass Co-fired Thermal Power Plants  CER estimated the biomass consumption across ISGS plants to range from 8.79 MT to 17.58 MT based on 5-10% biomass blending. This seems feasible as agriculture sector produces about 140 MT of surplus biomass. It is estimated that 92 MT of agricultural residue is burnt annually leading to serious environmental implications                                   
 Biomass blending will help in reducing stubble burning by providing greater economic benefits for agriculture residue to the farmers if appropriate supply chain is established to ensure higher recovery of agricultural residue and its pelletization. This will eventually reduce air pollution and coal consumption. However, overall fuel cost may increase on account of transportation, pellet conversion and storage of biomass pellets. (Clause 1)                                   
 This scheme should be primarily extended to the thermal power plants located in areas with abundance of available agricultural residue to avoid deforestation. Further, pellets based on agricultural residue or biomass waste from industries dependent on commercial plantation should be promoted. (Clause 1)                                   
 If energy generated through biomass source is to be used towards RPO compliance, third party inspection and measurement of GCV for biomass used by a NABL approved laboratory should also be considered. (clause 5)                                   
 CSERC (Grid Interactive Distributed Renewable Energy Sources) Regulations, 2019  While net metering provides adequate incentive to the consumers by displacing energy from high tariff slabs, it impacts financial health of the DISCOM. Pay-out for excess energy injected at lowest competitively discovered tariff for grid-connected solar PV ameliorates this impact. However, this should be adjusted for network losses (Clause 11(c))                                   
 In case of unavailability of competitively discovered tariff by DISCOM for the state, the lowest SECI discovered tariff for such projects across neighbouring states with similar solar insolation should be considered. (Clause 11(c))                                   
 Wheeling and banking charges and settlement period should also be specified in the regulation.                                   
 Green energy generated and consumed by the consumers, who are not obligated entities, would be counted towards RPO of the DISCOM. The framework does not compensate consumers for value of embedded REC. Given the inherent value of such RE procurement to the DISCOM, and to encourage rooftop RE deployment, DISCOMs should provide 50% of floor price of REC to the consumers as an incentive. (Clause 7.1)                                   
 CSERC (Standard of Performance in Distribution of Electricity) Regulation, 2019 [Draft] Alternatively, the DISCOM may like to demarcate each feeder and consumers connected to it as a business unit, whereby SoPs within the business unit can be monitored. A SoP index for such business units, developed on the basis of key performance parameters, should be used for implementing a penalty/incentive framework for the associated  employees.  The  SoP  index  should  include  key  performance  indicators  such  as  distribution  loss, collection efficiency, SAIFI, SAIDI and other parameters reflecting performance against the SoP. (Clause 3.1)                                   
 Given that DISCOM would manage a system of complaint registration and follow thereof, such a system should have  a  mandatory  audit  trail  with  due  communication  (SMS/email)  to  the  consumers.  Further,  SoP  audit  by independent third parties such as CPRI, ERDA or other NABL approved laboratories, research institutions would instil consumer confidence. (Clause 4.1)                                   
 Compensation recovery from the concerned employees would increase accountability in the system. However, it poses challenges for its implementation, especially in the absence of 100% mapping of roles and responsibilities across  the  distribution  business  and  amenability  of  such  a  database  to  judiciously  fix  accountability  against individual SoP. (Clause 4.4, 5.1)                                   
 A summarized version of SoP should be printed on backside of consumer's electricity bill to spread awareness. (Clause 6)                                   
  The commission may periodically review the current level of performance and setup multi-year benchmarks for SoP. (Clause 6.1)                                   
 Details of compensation claimed along with that payable/paid to consumers for complaints against failure to meet each type of SoP, should be available on the website of the respective DISCOMs and be reported to the CSERC on a quarterly basis. (Clause 6.1)                                   
 DERC Business Plan Regulations 2019 SBI MCLR varies based on the tenure of the loan, and applicability of appropriate MCLR needs to be specified. thFurther, it is now reported on 10  of every month. The regulation, which suggests use of MCLR at the beginning of the month, may like to take this into account and do the needful. (Clause 5, 14, 22)                                   
 Any refund towards Advance Taxes paid should be considered while grossing up the RoE in true-up to follow.                                   
 Clause 9 (1) offering PLF based incentives cannot be easily operationalized based on normative annual PLF. Thus, differentiation on account of peak and off-peak hours should be avoided. Also, the incentive mandated for excess generation,  if  continued  should  be  retained  at  the  previous  level  to  reduce  burden  on  consumers.  Further,  a differential incentive for the peak and off-peak hours may also alters the relative value of plant availability during peak hours with respect to other hours of the day.                                    
 In the case of increase in “Scheduled Generation” beyond NAPLF due to the URS scheduled for other beneficiaries or as a result of the outcome of SCED, the above incentive will place additional burden on power procurement cost. (Clause 9(1))                                     
 Sharing of gains from improvement in operational parameters, which is ascribed to be specified in BPR Regulation 2019, and clause 149 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017, in turn, refers to BPR 2017. The information gap needs to be addressed. (Clause 10(1))                                   
 Introduction of 85% limit in RPO is encouraging for the sector. Flexibility in meeting RPO compliance would bring in economic efficiency to the obligated entities to achieve these targets. Given that the competitively bid tariffs for solar and wind power procurement are converging, this differentiation may be relaxed in future. (Clause 27(1))                                   

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 Vol 02 Issue 02 (Oct 19)                      

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  Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM)  Use of agricultural land for setting up of solar modules (on stilts) in arable land would either lead to encourage unabated conversion of arable land affecting local employment for agricultural labour and long term food production.                                   
 Farming activity cannot be effectively continued on the piece of land, used to deploy solar panels (even on stilts). Shadow from fruit plantation would also reduce CUF over the lifetime of the solar plants. These land selections should ensure minimal loss of arable land. GPS boundary marking of the site could be mandated to avoid such land conversion.                                   
 DISCOM to publish substation-wise data on location (including GPS), unique asset number, total capacity, available surplus capacity, capacity allocated for REPP, including details of plant location, plant size, date of application, date of LoA, status of EMD & PBG post 30-day limit after LoA and actual date of deposit EMD & PBG, date of installation, date of synchronisation, meter ID etc.                                   
 In case the feeding substation is not repaired within the time limit set under SoP, approved by respective SERC, the RPG should be paid for deemed generation of power based on suitable norms for that area.                                   
 The enforceability of minimum CUF 15% is questionable as the guidelines do not specify the repercussion of failure to do so. Also, radiation level for identifying low solar radiation zones should be predetermined as the respective SERC may decide levelised tariff otherwise investment for setting up plants in such zones would be inefficient as well as uneconomical.                                   
 It should be specified whether EMD/PBG will be applicable on pro-rata basis in case of part MW capacity.                                   
 The procedural complexity particularly in the context of PPA, EMD, PBG and PBI needs to be minimized for the farmers/cooperatives/panchayats/FPO/WUA, who would face significant transaction cost in dealing with multiple offices located in urban/semi-urban centres.                                   
 The mechanism for enabling replacement of owned/rented diesel pump sets needs to be clearly enunciated.                                   
 Given the poor financial state of most of the DISCOMs across the country, payment of PBI should be implemented under a direct benefit transfer scheme on monthly basis.                                   
 A large number of states provide rotational power supply to farmers primarily during night hours ensuring adequacy of supply as well as cheaper cost of power purchase. Ensuring the must run status to REPP by keeping feeders ON during day time, in the near term, would impose additional day time system load for which the DISCOM may have to undertake relatively costly power procurement. Presence of single REPP would force the DISCOM to keep the feeders ON during day time, which may not be feasible as feeder separation has been implemented by most states allowing curtailment of power during the day.                                   
 Most small and marginal farmers may not use micro irrigation system.                                   
 Process of sanction and implementation of the scheme should be streamlined by the respective State Nodal Agencies for RE through a web-/mobile- based system.                                   
 UPERC Captive and Renewable Energy Generating Plants(CRE) Regulations, 2019  DISCOMs' concern for the value of banked and drawn power has been addressed adequately by implementing ToD based drawl against banking of energy. Given the reduction in risk exposure of DISCOMs, banking charges may be reduced. Dispatchable RE (excluding solar and wind) should be subjected to same, if not lower the banking charges.                                   
 Seasonality of banked energy should also be considered for drawl if power banked during surplus months is to be                                     drawn during high demand months.                                   
 The upper limit of 2/kWh rate for purpose of unutilised banked power by DISCOM, though appropriate for solar                                     and wind, is low in case of SHP and MSW plants and may be appropriately revised.                                   

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 Vol 02 Issue 01 (Jul 19)                      

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                              Delhi Electricity Regulatory Commission (DERC) (Group Net Metering                                   and Virtual Net Metering for Renewable Energy) Guidelines, 2019 Group/Virtual Net Metering guidelines, while being beneficial to consumers, would provide further impetus to the harnessing of RE resources
 The scheme could be made more attractive by allowing REC credits in lieu of net RE injected to the grid. These could be accumulated and later sold through the registered members of the power exchanges
 Key features of the scheme, particularly sharing of RE credit, should be facilitated through online mode. Further, participation of consumers with respect to RE sharing can be authenticated through consumer's registered mobile number
 The guidelines should provide for the determination of incremental cost for replacing a partially or fully depreciated meter, and for writing off a meter which has completed its useful technical life
 For consumers with ToD meter, provision for moderating surplus units should be replaced with ToD based price
 Peak, off-peak and normal hours should be clearly defined. Given the dynamic nature of system demand profile, seasonal definition for the same may also be adopted

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Volume 01

                          
                        
 Vol 01 Issue 04 (Apr 19)                      

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                                 Key Features of Central Electricity Regulatory Commission(Cross Border Trade of Electricity) Regulations, 2019 Coordination between system operator and transmission utilities of the interconnected countries, specifically for the grant of short-term, medium-term and long-term open access, needs to be ensured so that two nodal agencies do not end up giving uncoordinated open access for the same interconnection up to the pooling stations of the respective countries
 Provisions for determination of tariff for import of electricity in the case of hydro projects located in neighbouring countries need to be clarified in the context of small projects, multiple projects, and less than 100% allocation of a single or multiple hydro projects. The role(s) of intermediaries (like traders) may also be specified
 Scope and modalities of dispute resolution, including arbitration, may be pre-specified to avoid conflicts thereafter. For example, in case a legal recourse has been resorted to by any of the affected parties of their respective country, either or both of them getting a favourable outcome may complicate the dispute resolution process unless modalities of arbitration are able to address this beforehand
 It is not clear as to which International Arbitration Centre (IAC) is referred to in the regulations, as such IACs are located within India as well as in other locations like Singapore, Hong Kong, London, etc
 In the case of CBTE, taxes, duties, etc. may be applicable both within the exporting as well as the importing entity. However, Section 30(3) refers to those applicable within India only
 The regulations are designed from the Indian perspective – for both import and export of electricity. However, regulatory provision for ‘transit’ of electricity needs to be detailed out as well

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 Vol 01 Issue 03 (Jan 19)                      

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 Regulatory Guidelines and Standards for Electric Vehicle Charging Infrastructure by Ministry of Power (MoP) The rigidity of the area grids (3 km × 3 km or 25 km × 25 km) for installation of EV charging stations is undesirable. The choice of grid size or distance for setting up PCS should be flexible and based on feasibility studies, considering EV clustering, travel patterns, availability of parking space, vehicle characteristics, economics of ridership, etc. Existing parking stations at public and semi-public places should be identified first for setting up PCS under publicprivate partnership (PPP) framework. This would help avoid high incidence of land cost in initial phases
 EV charging roll-out strategy should be flexible and account for expected growth in EV population, capacity of onboard battery, feasibility of battery swapping, ridership, availability of space, etc. It should also be compatible with EV roll-out across vehicle user segments, cab aggregators, food delivery services, postal services, and other logistic services with a predictable range of travel
 A study by IIT Kanpur evaluated business models for EV charging infrastructure for two highways and a metropolitan city. The study suggested that bidding parameters based on Viability Gap Funding (VGF) may be used for setting up EV PCS under PPP framework. Furthermore, it was also found that the absence of time-of-day (ToD) based tariff may significantly alter the demand profile in future
 Competitive bidding-based PPP framework using VGF as a bidding parameter should be used for setting up EV infrastructure
 Tariff (including ceiling tariff) for EV charging should be a part of Tariff Policy. Moreover, EV charging, especially for PCS and fast private charging, should be a separate consumer category with ToD-based tariff to ensure that such infrastructure does not adversely affect the load curve in future
 A separate tariff category for EV charging infrastructure would facilitate determination of tariff by ERCs and maintaining a database of PCS. This would also provide for innovation in tariff design, especially ToD tariff
 The identified State Nodal Agency should facilitate setting up of EV charging infrastructure under PPP framework instead of taking charge of setting up such infrastructure using public funds
Automobile agencies or industry associations also play a constructive role in the preparation of an integrated and phased development plan for EV charging infrastructure
 Requirement of amenities should be applicable for EV charging stations located on highways. For urban locations, adequate amenities may be made mandatory for PCS with large charging infrastructure
 National Wind-Solar Hybrid Policy by Ministry of New and Renewable Energy (MNRE)                              input-field                             A hybrid system would improve the overall power generation profile as wind and solar generation profiles can complement one another, moderate the overall variability and economise the CAPEX accounted, thus making it more conducive for grid integration
 However, resource intensity for a given or prospective project site may not be optimal for both wind and solar simultaneously, leading to compromise in efficiency. Thus, availability of project sites with optimal wind as well as solar energy might pose a challenge for deploying hybrid systems
 A mechanism for apportionment of RPOs and RECs into solar and non-solar needs to be designed. Apportionment of scheduling of power in case of separate PPAs for solar and wind also needs to be addressed, especially for existing plants to be hybridised. This can be done:                               As per the Agreement between the two parties of the PPA
 As declared by the generator
 By adopting normative generation schedule
By installing separate transformers and metering infrastructure

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 Vol 01 Issue 02 (Oct 18)                      

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  Additional Draft Amendments to Tariff Policy, 2016 Simplification of Tariff Categories and Rationalization of Retail Tariff by Ministry of Power  In a DBT regime as proposed in the draft amendments to Tariff Policy (May, 2018), low tariff for lower consumption categories should be done away with, else it will diminish the efficacy of DBT
 The proposed amendments should mandate time-ofday (ToD) tariff for consumers with load above 10 kW (to be further reduced to 5 kW gradually), with appropriate metering
 ToD-based or dynamic tariff should be adopted for all consumers with smart meters to harness their potential especially to manage their electricity demand
 A detailed impact assessment of the proposed tariff categorisation on revenue realisation by utilities, and consumers' bills should be undertaken
 Reliability-based tariff should be implemented in place of proposed 24×7 electricity supply mandate. Moreover, the 24×7 supply clause leaves room for interpretation without relating it to the 'demand' (contracted/sanctioned load) of the consumer
 Penalty for exceeding sanctioned load should be at least twice the fixed charge on additional load for encouraging consumers to get their sanctioned load revised
 Central Electricity Regulatory Commission (Planning, Coordination and Development of Economic and Efficient Inter-State Transmission System by Central Transmission Utility and Other Related Matters) Regulations, 2018 by the Central Transmission Utility(CTU) Transmission planning should also consider the expected impact of cross-border electricity trade
 Impact of technological disruptions, on account of uncertain demand for EV charging, smart-grids and storage should also be taken into consideration
 Integration of renewable energy resources characterised by intermittency and uncertainty necessitates advances in planning and operation of electricity grid to minimise the adverse impacts of significant variations in RE generation
 Disaster management and recovery planning strategy must be in place to reduce the impact of unforeseen events
 Amendment of RSPV (Gross & Net Metering) Regulations, 2015 (UPERC Concept Paper) by Ministry of New and Renewable Energy (MNRE) Solar power banking can have adverse impact on the finances of DISCOMs and on system scheduling. However, a ToD provision for both injection and drawl can help ameliorate such impacts
 RSPV installation process should be implemented through an online portal to facilitate its speedy adoption

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 Vol 01 Issue 01 (Jul 18)                      

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  Offshore Wind Competitive bidding for offshore wind should be the only basis for its development
 Cost of dedicated transmission line from offshore pooling station to the CTU/STU network can be supported by viability gap funding from the corresponding Regional Deviation Pool Account Fund. A specific normative amount should be pre-specified in the bid document
 NLDC should, in cooperation with IMD and NIWE, set up a   dedicated centre for monitoring and forecasting of generation
 Amendments to Tariff Policy, 2016 (Draft) released by Ministry of Power The tariff principles should emphasise competition and efficiency in the sector
 To optimise power purchase cost, trade of un-requisitioned power, separately for peak and off-peak hours, should be promoted through competitive bidding
 SERCs should have the flexibility to adopt more stringent operational and financial norms than those laid by CEA/CERC. Operational norms should be delinked from past performance
 MYT Regulations should continue to provide for sharing of benefits from performance improvement of utilities
 A regulatory framework for demand forecasting and efficient power procurement planning should be adopted
 To manage the underutilisation of generation capacity resulting in un-requisitioned surplus, the policy should provide for intra- and inter-regional reassignment/swapping of capacity under existing PPAs by DISCOMs
 Adoption of RECs as a tool for RPO compliance would deepen the REC market
 TOD tariff should be adopted for EV charging by all consumers. A separate category may be created for EV charging stations
 Reliability-based tariff and TOD tariff should beimplemented for consumers with load above 10 kWacross all consumer categories
 Direct benefit transfer, which would not only help reduce the subsidy burden of the State Government but also address inefficient consumption, should be implemented in a transparent manner
 Deployment of smart energy meters should be based on a cost-benefit analysis and follow an implementation strategy targeting large consumers in a stratified manner. Prepaid meters must be mandated for defaulters and temporary users
 Distribution utilities should adopt a bottom-up approach by setting distribution transformer level AT&C loss reduction targets
 Terms and Conditions of Tariff Regulations (Consultation Paper) by CERC Incentive on early completion of project should be replaced with penalty for delay as the currentframework places additional burden on consumers but allows full recovery of ROE even in case of delayed projects
 Benchmarking of capital and operating costs should be based on best national and international practices
 Technical minimum operating capacity and heat rate compensation for operating below normative level should be fixed based on a certified third party assessment
 Allowable ROE should be periodically revised as per appropriate risk evaluation approach
 Deviation Settlement Mechanism and Related Matters (4th Amendment) Regulations, 2018 (Draft) by CERC Area-specific Market Clearing Price (MCP) can be used for differentiated DSM price vector in the case of market splitting.
 The ultimate goal should be a vibrant ancillary services market that renders DSM 'irrelevant'
 The resultant short-term spurt in price vector may need to be smoothened by migrating gradually from the existing deviation price to ACP in a period of 6 months or so
 Effectiveness of an inter-state DSM needs to be supported with an analogous and effective intra-state ABT regime that should also be reflected in RE deviations

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