The Chhattisgarh State Electricity Regulatory Commission (CSERC), in a recent order, imposed a penalty of ₹100,000 (~$1,343) on a captive power producer for non-compliance of renewable purchase obligation (RPO).

Background

Chhattisgarh State Renewable Energy Development Agency (CREDA), the nodal agency for reporting RPO compliance in the state, filed the petition for non-compliance of RPO by Indsil Energy & Electrochemicals for the financial year (FY) 2016-17 and FY 2017-18.

Indsil Energy & Electrochemicals, a Coimbatore-based manufacturer of ferroalloys, is a captive power producer operating a 21 MW hydropower project located in Kerala and a 12 MW thermal power plant in Raipur. The company was merged with Indsil Hydro Power and Manganese Limited in 2018.

CREDA has stated that Indsil Energy & Electrochemicals is an obligated entity that has failed to fulfill its solar and non-solar RPO of 5.1 million units in FY 2016-17 and 2.25 million units in FY 2017-18. It failed to procure a total of 7.26 MU, including 1.44 MU solar and 5.82 MU non-solar as per the RPO targets.

The Commission proceeded ex-parte against the captive power producer on October 5, 2019, as it did not appear before the Commission despite serving three notices. An ex-parte proceeding occurs for orders that can be granted without waiting for a response from the other party.

In its order dated December 20, 2019, the Commission issued a show-cause notice to Indsil to file a reply before January 17, 2020, regarding its RPO compliance. However, the respondent again failed to submit a reply and was not present on the hearing date. Therefore, the Commission was forced to proceed ex-parte against the respondent regarding the show cause notice.

As per section 142 of the Electricity Act, 2003, the Commission is empowered to impose a penalty for contravention of its orders and regulations. The Commission may also impose the maximum penalty of ₹100,000 (~$1,343) on the entity failing to comply with its orders. It can also impose an additional maximum penalty of ₹6,000 (~$61) per day until the failure to comply with the RPO continues after the breach of the first such direction.

Commission’s analysis

After examining the submission by the petitioner, the Commission imposed a penalty of ₹100,000 (~$1,343) on the respondent for RPO non-compliance. The Commission stated that the penalty must be deposited within 60 days.

The Commission also noted that Indsil was deliberately not present in the hearings and had not filed any replies.

In its analysis, the Commission directed Indsil to maintain a fund. The Regulation 9 of RPO allows the Commission to direct the obligated entity to maintain a separate fund for the amount determined by the Commission based on a shortfall in units of RPO and the forbearance price decided by the Central Commission.

The Commission stated that the respondent must open a separate bank account in any scheduled bank to maintain the fund. The respondent would not be allowed any cash transaction from that account and must use the account for procuring renewable energy to meet its RPO.

The Commission also directed Indsil to deposit ₹7.26 million (~$97,500) as per the existing price of renewable energy certificates of ₹1 (~$0.013)/unit by October 11, 2021 as the respondent failed to procure 7.26 MU of renewable energy.

In its analysis, the Commission stated that Indsil would also be liable to pay a penalty of ₹5,000 (~$67) per day until the date of deposit if it failed to deposit ₹7.26 million (~$97,500) by October 11, 2021.

Earlier this month, The Maharashtra Electricity Regulatory Commission allowed captive power producers to fulfill their RPO backlog for the financial years (FY) starting 2015 to 2020, by March 31, 2022.

Mercom had earlier reported that the Uttar Pradesh Electricity Regulatory Commission directed Uttar Pradesh Power Corporation to deposit ₹72.45 billion (~$978 million) in RPO Regulatory Fund, including ₹14.59 billion (~$197 million) on account of shortfall in RPO compliance until FY 2020-21 and ₹57.85 billion (~$780.93 million) against projected RPO requirements for FY 2021-22.

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