Power regulators want Act tweak to penalise state discoms on green clause

Forum of Regulators has stressed need for invoking existing regulations of imposing non-compliance charge

Faced with the prospect of state distribution utilities not complying with renewable power obligation (RPO), Forum of Regulators (FOR), a representative body of Central and state regulators, has called for amendments to the Electricity Act, 2003, empowering regulators to impose penalty for non- compliance. FOR has also stressed the need for invoking the existing regulations of imposing non-compliance charge.

Under RPO, state utilities are expected to procure certain per cent of total annual power purchases from renewable sources. The state-wise RPO targets are fixed by the respective state electricity regulatory commissions (SERCs) and they are expected to increase annually. During 2012-13, RPO targets ranged from two per cent for Tripura to eight per cent for Maharashtra.

A FOR member, who did not want to be identified, said even though some SERCs have taken progressive steps to monitor and enforce RPO, there is a need for specific provisions to be made in the Electricity Act, 2003 for deterrence against non compliance.

“Central Electricity Regulatory Commission (CERC) in its statutory advice to the power ministry had pitched for specific provisions to be incorporated in the Electricity Act for RPO compliance. Punjab is unique as it has made provisions for separate funds under annual revenue requirement (ARR) for RPO compliance including through purchase of renewable energy certificate. This could be considered by other states,” said the member.

CERC's former chairman, Pramod Deo, told Business Standard that state regulators are worried if an increase in RPO would unduly burden consumers.

“To allay this fear, FOR had conducted a study, which clearly shows that the impact of increased RPO on retail tariff is marginal. Not only that, FOR had obtained legal opinion that regulators can prescribe differential RPO so that industrial and commercial consumers who contribute more to environmental damage should be given higher RPO target. Such differential RPO setting will not burden common consumers at all.”

Talking to Business Standard, a MahaViataran official raised doubts over adhering to the RPO and said that power consumption cannot be doubled from renewable sources, but they can be at the margin.

“Besides, renewable power is expensive and not affordable. For doubling consumption and thereby doubling the growth rate, reliable and affordable power is needed. So you must have a trajectory which is viable and achievable.”

According to the FOR member quoted above, most of the SERCs have adopted the provision of model regulations for enforcement of RPOs. However, the SERCs have not invoked this provision so far. On the other hand, some SERCs have allowed the carry-forward of RPO compliance in the event of the non-compliance.