Changes to Electricity Act propose penalty norms for PPAs, RPOs

The proposed electricity amendment bill will include penalty provisions, stricter enforcement of power purchase agreements (PPA) and renewable purchase obligations (RPO), Power Minister R.K. Singh said on Thursday.

"We will deal with the issues of PPA (power purchase agreement) and RPO (renewable purchase obligation) among others in the Electricity Amendment Bill," he told reporters on the sidelines of an investors' forum here organised by the industry chamber Assocham.

"We are going to change the law and provide that any PPA which is signed, will be honoured. If they don't honour it then there would strict penalties. So the uncertainties will go," he said.

"We will also bring it to the law making it necessary for all discoms to tie up for PPAs to cover the requirement of power in the area which they serve. They must have tied up PPA to cover 100 per cent of that requirement before their licences can be renewed.

"You cannot get a monopoly licence to distribute power in certain area without tying up PPA for 100 per cent requirement," he added.

With electricity demand growth in India not keeping pace with the excess capacity addition and with tariffs falling, producers are facing offtake issues on power that they have not already tied up for sale through long-term PPAs.

In this connection, JSW Energy Chief Executive Prashant Jain told a news channel recently that while the company had tied up for the offtake of about 65 per cent of its power generation through long-term PPAs, it is facing challenges about disposal of its remaining "untied capacity".

Regarding the renewable purchase obligations of discoms, Singh said: "The bill will also provide that RPOs will be obligatory, a statutory legal compulsion. We are going to world saying our 40 per cent of power would be from renewables."

Declaring he will try to move the amendment bill in the upcoming winter session of Parliament, Singh said it also proposes imposing stricter penalties for non-payment of electricity bills.

--IANS

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