If a distribution company overdraws power due to excessive demand, it will not be able to recover additional charges from consumers. The Forum of Regulators, representing Central Electricity Regulatory Commission(CERC) and all the state electricity regulatory commissions, has agreed that the additional unscheduled-interchange (UI) charges imposed on distribution utilities for excessive overdrawl from the grid would not be allowed to be recovered from consumers from August 1, 2009.
The forum has considered the recommendation of the parliamentary standing committee on energy that the regulators should evolve such practice that when the Annual Return Rates are being filed, the damages which have been imposed as Unscheduled Interchange charges should be stated separately and very clearly and those payments which are in the nature of damages should not go to show purchase of power because that really is the inefficiency or incompetence of that particular distribution company or entity.
The distribution utilities will now be required to forecast their demand more precisely and plan the power purchase in advance. Otherwise, they will have to bear the burden of additional UI charges from their own finances and will not be able to pass this on to the consumers.
After deliberation on the recommendation, the Forum of Regulators arrived at a consensus that the additional UI charges imposed on the utilities under the UI regulations of CERC for overdrawl during the period when grid frequency is below 49.2 Hz. should not be permitted in the annual revenue requirement of distribution utilities.
CERC had on March 30, 2009 notified new regulations rationalizing the UI mechanism sending unambiguous message that it is not meant for trading of electricity and will be mainly an instrument for grid discipline and settling the unintended deviations during the normal course of operations and when the frequency is in normal operating range according to the Indian Electricity Grid Code. The objective of this measure was to promote electricity markets for providing certainty to the investors and also to penalize the utilities who indulge in excessive withdrawl from the grid.
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