CERC asks power generating cos to pay fines for unused transmission lines

This development comes at a time when the thermal power sector is saddled with 40,000 MW of stressed assets

Stranded power-generating projects will now have to bear the cost of abandoning the allied transmission system. 

In its latest order, the Central Electricity Regulatory Commission (CERC) directed power-generating companies (gencos) to pay the transmission and relinquishment char­ges for the stranded transmission capacity resulting on acco­­unt of the abandoned projects. 

This comes at a time when the thermal power sector is saddled with stressed assets of 40,000 Mw. Of this, close to 11,000 MW does not have a power purchase agreement (PPA) with any state. 

This makes them the first contender to pay relinquishment charges for abandoned lines, as they are not using it to supply power round the clock. Most of the stressed units have also shifted their transmission plans because they changed their consumer or decided to sell power in the open market.

The CERC (Grant of Connectivity, Long-term Acc­ess and Medium-term Open Access in inter-State Transm­ission and related matters) Regulations, 2009, specify the charges for relinquishing a line. The regulations mandate any genco which applies for long-term access (LTA) to a transmission line for 12 years will be liable to pay compensation in case it abandons it.

The Central Transmission Utility (CTU) is charging approximately Rs 40 lakh per Mw as relinquishment charges from any generating company that surrenders a transmission network due to either lack of power demand or change of power supply plan. These charges are levied for a period of 12 years counting it as stranded. State owned Power Grid Corporation of India is also the owner and manager of the national grid as Central Transmission Utility (CTU).

The power companies which are affected by the relinquishment charges are in nor­th, east and west regions inc­lude Essar Power, Jindal India Thermal Power, Jaiprakash Ventures, GMR Energy, Lanco, MB Power, KSK Mah­andi etc. These are same power companies facing or about to face insolvency proceedings. 

“If such a customer submits an application to the CTU at any time lesser than a period of one year prior to the date from which such customer desires to relinquish the access rights, such customer shall pay an amount equal to 66 per cent of the estimated transmission charges (net present value) for the stranded transmission capacity for the period falling short of a notice period of one year,” the Regulation said. For the projects that provide preliminary notice and those who changed their transmission plan, no penalty would be imposed. 

The CERC has also directed the CTU to create a separate account for the relinquishment charges and it should be used to discount transmission charges for the existing long-term & medium-term consumers on that same transmission line. 

A senior power executive said, “For all these years we are paying close to Rs 80-90 crore annually for not using a line as the CTU thinks surrendered capacity as stranded and we are supposed to pay this amount for 12 years. The relinquishment charges are not payable in an inter-meshed network; there is no stranded capacity or empty line.”

A senior official at the CTU said that generation has become so dynamic that the transmission plan keeps chan­ging, hence the generation company is payable for any change in the transmission plan. He further said that real-time open market in power sector is increasingly becoming popular where long term agreements are no longer preferred. This disturbs the transmission planning that was done keeping long term supply in mind from a particular plant.