DERC-discoms face-off likely over power purchase costs

Wednesday, 24 June 2015 11:54 Pradeep B

DERCThe Delhi Electricity Regulatory Commission (DERC) and the power distribution utilities are heading for a face-off over power purchase costs.

In its recent order on power purchase adjustment surcharge (PPAC), the regulator disallowed power purchase and related generation costs from three central sector plants — Anta, Auraiya and Dadri Gas — for all three discoms, claiming that the discoms did not take DERC's approval before renewing the power purchase agreements (PPAs) and scheduling power from these plants. "The PPAs of Tata Power Delhi, BRPL and BYPL for Anta, Auraiya and Dadri had expired on March 31, 2012," it added.

The discoms, however, said they would approach the Appellate Tribunal of Electricity (APTEL) over the disallowance and claimed it was done only to keep the PPAC surcharge to a minimal amount. The agreements were made as per Central Electricity Regulatory Commission regulations for 25 years with no exit clause, they said.

ccording to the last week's order, "The renewal of PPAs without the permission of the commission is a violation of the licence conditions and the commission has called for an explanation. Since the discoms are scheduling power from these plants without prior approval, therefore, the power purchase costs and related generation costs have not been considered for the computation of PPAC for these discoms."

The discoms have also repeatedly proposed surrender of power from these stations and Tata Power Delhi has even proposed to the Delhi government surrender of its entire share from Anta, Auraiya and Dadri Gas forever with immediate effect, DERC has pointed out.

Delhi gets about 200 MW from these three plants. "We have to continue scheduling power from these plants. In all its earlier calculations in average revenue requirement, DERC has always taken cognizance of these plants. The issue of taking approval never struck us and it was never raised earlier. The power generated from these plants is very costly and we have to bear fixed costs too. We try to schedule power from them only in periods of high load demand," said a BSES official.

Tata Power Delhi also justified its decision. "The renewal of PPAs is done based on demand and supply. You cannot run a network without continuing the supply. DERC, in its meetings, has always said this power has to be forecast in demand-supply. By action, it has given approval and this is an afterthought," said an official.

The discoms further alleged that the regulator had disallowed these costs only to reduce the PPA surcharge. "Had these costs been allowed as they should, the PPAC surcharge would be about 10-20%. But the commission wanted to keep it to a minimal and had to justify how to do it," said an official.

Source- Business standard