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Home News Power Sector News KERC requests Karnataka government to reconsider PPA tariffs of Rs 4.5 per unit

KERC requests Karnataka government to reconsider PPA tariffs of Rs 4.5 per unit

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KERCThe Karnataka Electricity Regulatory Commission (KERC) has requested the state government to “reconsider” its earlier direction to approve power purchase agreements (PPAs) of 270.5 MW of wind power projects that were commissioned before March 31, 2017 at tariffs of Rs 4.50 per unit. Karnataka’s electricity regulator had said last month that it would approve PPAs of these wind projects only if the developers agree to cut tariffs by 17% to Rs 3.74 per unit. The ministry of new and renewable energy (MNRE) in August told seven wind energy-producing states that wind power projects, which have already signed PPAs and were commissioned before March 31, should not face problems in selling power due to lack of regulatory consent. It had then added that the states may also consider using Section 108 of the Electricity Act, 2003, which gives the states more power to approve such power transactions.

Citing two separate judgments by the Delhi High Court and the Appellate Tribunal for Electricity (Aptel) of 2010 and 2011, respectively, KERC said that “it appears that the state government was not apprised of the principles stated in the judgements” before issuing the directions. The wind plants have been generating power since April 1 and they have not received any payment due to the PPA uncertainties. KERC had also issued an advisory to the state’s energy department stating there is no need for new wind PPAs and also advised the state to follow only the competitive mechanism route to award wind energy projects in the state, instead of feed-in tariffs (FiT) — a cost-based compensation system.

Currently, states buy wind-based electricity from the developers at various FiTs, which are in the range of Rs 4.16 to Rs 5.76 a unit. Karnataka recently modified its existing wind tariffs through an order dated September 4, even though the control period of the previous tariff was supposed to last till October, 2018. Many discoms from other states have been reluctant to buy renewable power at earlier rates after low prices were discovered in tariff-based reverse auctions.


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