Government asks CERC to relieve power plants delayed due to force majeure from transmission levy

New Delhi: The government has invoked special powers to direct electricity regulator to make changes in regulations freeing power plants delayed due to justifiable reasons from paying penalties to associated transmission projects.

The penalties would now be borne equally by all beneficiary discoms of a generation project, as per the directions issued by the Union power ministry to the Central Electricity Regulatory Commission (CERC) under section 107 of the Electricity Act 2003.

While power generation and transmission companies welcomed the relief, distribution companies said the move asking them to pay for delay in generation projects came as a shock to them.

“Penalties for delay in COD (commissioning) of generating stations, or for delay in completing transmission system, or operationalising the LTA (long-term agreement) shall invite penalties to be paid to CTU (central transmission utility). The penalties shall be equitable; and shall not extend to compensating either the Generation companies for power it could not despatch because of delay in transmission or to compensate the transmission company for the delay in generation or the associated transmission,” the central government directions to CERC to amend Sharing of Inter-State Transmission Charges and Losses Regulations, 2020 said.

Power transmission projects attached to delayed generation plants are considered ‘deemed commissioned’ and are liable to compensation but the complexity in arrangement makes it difficult to claim any amount.

In the present system, the CTU coordinates with transmission licensees on one hand and all other users on the other. There are back-to-back agreements between CTU, the transmission licensees and distribution companies and generation companies are outside these contracts. The power ministry is working to amend the structure to bring in transmission licensees and generators together.

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A senior government official said the directions are aimed at ease of process. “If the delay is not attributable to the parties, none of them should take the hit,” he said. The directions said the entire burden of strengthening which will serve many procurer or power producers in the future cannot be levied on one party.

“Over 3-4 years, it is being realised that is possibility of mismatch in timelines in commissioning of generation companies and associated transmission lines. The regulators deny compensation since the line is not being used. Lack of agreement with generation companies closed hopes of compensation. The investors to these transmission lines have started worrying over collection of the charges. This is a very positive development,” said an industry official.

Electricity distribution companies opposed the move calling it unfair to be penalised for no fault. “This will lead to passing of private losses to the general public and tariff shocks,” an official said.

The directions said events of force majeure may be defined by CERC and provision included enabling the CTU to extend the commissioning of a generating station.



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