Power ministry clears air on BSES exit from Dadri pact – Times of India
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NEW DELHI: The power ministry has informed states that discoms (distribution companies) have the option of exiting a PPA (power purchase agreement) after 25 years, clearing the way for BSES Yamuna Power and BSES Rajdhani Power to walk out of a costly deal with state-run NTPC’s Dadri unit.
The ministry sent a circular to all states and central generation utilities on Monday, saying the power stations were free to sell through various mode the quantity of electricity freed after a discom exits a PPA.
The ministry’s circular was prompted by queries from stakeholders in the wake of the central tariff regulator’s ruling on petitions by the BSES discoms.
The Central Electricity Regulatory Commission (CERC) on July 2 said current rules give discoms the right to exit PPAs after the concerned power station completes 25 years of commercial operation, considered the full lifecycle of a plant.
The CERC ruling and the ministry’s clarification will help reduce upward pressure on tariffs for 45 lakh BSES consumers and the Delhi government’s subsidy burden. BSES discoms can buy power from exchanges at half the price of Rs 6 per unit it paid for supply from Dadri. BSES Yamuna had an allocation of 62 MW and BSES Rajdhani 560 MW from the Dadri Stage-I unit.
The discoms stopped requisitioning power, called ‘scheduling’ in industry parlance, from the allocated Dadri-I capacity once it completed 25 years of operation on November 30, 2020 and sought to end the PPA. But NTPC did not agree, prompting the discoms to move CERC.
The power ministry’s clarification has the potential of opening a floodgate of similar exit petitions across the country as discoms are increasingly tapping cheaper power from renewable sources to reduce costs.
The BSES case also reflects an ongoing transition in the power market, where rising supplies from renewable sources are putting downward pressure on tariffs and squeezing demand for costly power from coal-fired plants.
The ministry sent a circular to all states and central generation utilities on Monday, saying the power stations were free to sell through various mode the quantity of electricity freed after a discom exits a PPA.
The ministry’s circular was prompted by queries from stakeholders in the wake of the central tariff regulator’s ruling on petitions by the BSES discoms.
The Central Electricity Regulatory Commission (CERC) on July 2 said current rules give discoms the right to exit PPAs after the concerned power station completes 25 years of commercial operation, considered the full lifecycle of a plant.
The CERC ruling and the ministry’s clarification will help reduce upward pressure on tariffs for 45 lakh BSES consumers and the Delhi government’s subsidy burden. BSES discoms can buy power from exchanges at half the price of Rs 6 per unit it paid for supply from Dadri. BSES Yamuna had an allocation of 62 MW and BSES Rajdhani 560 MW from the Dadri Stage-I unit.
The discoms stopped requisitioning power, called ‘scheduling’ in industry parlance, from the allocated Dadri-I capacity once it completed 25 years of operation on November 30, 2020 and sought to end the PPA. But NTPC did not agree, prompting the discoms to move CERC.
The power ministry’s clarification has the potential of opening a floodgate of similar exit petitions across the country as discoms are increasingly tapping cheaper power from renewable sources to reduce costs.
The BSES case also reflects an ongoing transition in the power market, where rising supplies from renewable sources are putting downward pressure on tariffs and squeezing demand for costly power from coal-fired plants.
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