AP power regulator snubs discoms over renewable energy obligations

The Andhra Pradesh Electricity Regulatory Commission (APERC) has asked the state discoms to procure power from renewable energy producers not only to meet the energy requirement of the state but also as part of their obligation to honour the power purchase agreements (PPAs).

These directions came as part of the APERC's Tariff Order determining the retail tariff, the energy supply and the Discoms' revenue requirements for the year 2020-21, issued on Monday.

The power regulator also snubbed the state power utilities for not showing the renewable energy as part of the overall energy availability in the state in their annual revenue requirement (ARR) filings for the year 2020-21.

Taking the renewable energy sources into account, the power regulator has raised the energy availability by 12,046 million units (mu) to a total of 78,405 mu in the state, thus integrating all energy sources for ARR calculations for next year.

The power regulator rejected the discoms' proposal to buy power from private power plants who are not having any binding agreements, compelling the power utilities to meet any additional energy requirement next year from renewable energy producers having PPAs.

The private renewable energy players, who command a combined installed capacity of over 8,000 mw in solar and wind energy in the state, had entered into a bitter legal battle with AP power utilities last year after the latter had unilaterally demanded reduction of procurement tariff agreed in PPAs.

 While the dispute is yet to be settled legally, the electricity regulatory commission in its orders clearly told the Discoms to stick to their obligations with regard to the renewable energy agreements until there was closure in judicial forums.

Recently renewable energy producers approached the AP High Court alleging that the state power utilities were cutting down the procurement of renewable energy.

Citing a previous high court order which said, as party to the contract, the Discoms were bound to discharge their functions as per the contract that is entered into till the same is varied, modified or set aside, the Regulatory Commission stated the following:

 "Though, the said order is the subject matter of a batch of writ appeals, the above quoted part of the order of the learned single judge is still operative to the extent of the obligation of the Discoms to receive power supply from and payment of interim tariff to the RE developers. In this indisputable scenario, there is not only a legal obligation on the Discoms to comply with the judicial order by receiving power from these developers but also on this Commission to act in aid of such judicial order. If this energy is not included in the availability and dispatch, the Discoms will badly get exposed to the risk of suffering consequences of non compliance with the judicial order of a constitutional court. Being the apex regulatory institution for electricity industry in the state, this Commission cannot allow such an unseemly situation to arise by accepting the self-defeating plea of the Discoms."

Discoms have proposed a total energy requirement of 69977 mu for the year 2020-21 while projecting a shortage of 5,000 mu without considering wind and solar energy sources.

 Pointing to the energy shortage as projected by the state power utilities, the APERC said while the Discoms have a choice to meet the shortage either from sources which have the binding agreements or the market, it was in the overall interest of all the stake-holders that the energy from wind and solar sources has to be availed to the extent required.

APERC has approved Discoms' ARR of Rs 42,493.55 crore with a revenue gap of Rs 10,060 crore for the year 2020-21.

 However, the existing retail tariff of several categories of consumers kept unchanged except in few cases. The commission said the state government has agreed to meet the entire revenue gap of Rs 10,060 crore by way of subsidy.