The Himachal Pradesh Electricity Regulatory Commission (HPERC), in its recent order, has set ₹2.49 (~$0.033) as the average power purchase cost (APPC) for the financial year 2021-22 under the renewable energy certificate (REC) mechanism.

Background

The Himachal Pradesh State Electricity Board Limited (HPSEBL) had filed a petition with the Commission to determine the APPC for FY 2021-22 at ₹2.54 (~$0.034)/kWh.

The state distribution company (DISCOM) is expected to procure around 10,210 million units (MU) of power at the cost of ₹25.89 billion (~$344.51 million) in FY 2021-22.

The Commission issued a public notice in newspapers for any suggestions or objections on the aforesaid proposal from HPSEBL. It also requested the major stakeholders – small hydropower associations in the state, state government, and the Directorate of Energy and the Himachal Pradesh Energy Development Agency (HIMURJA) – to send their suggestions or objections.

In FY 2021-22, the state DISCOM purchased ₹496.17 MU at ₹3.28 (~$0.044)/kWh from the Indian Energy Exchange (IEX) and 34.95 MU at ₹4.17 (~$0.055)/kWh from the Power Exchange India Limited (PXIL). The state DISCOM’s short-term purchase stood at 681.33 MU at a tariff of ₹3.11 (~$0.041).

According to the advisory of the Ministry of Power, central public sector undertakings (PSUs) gave a rebate of ₹272 million (~$3.61 million) to HPSEBL for passing its benefits to end consumers for the lockdown period due to the Covid-19 pandemic.

HPSEBL considered ₹2.49 (~$0.033)/kWh as the APPC for FY 2020-21 because of an error instead of ₹2.35 (~$0.031)/kWh initially approved by the Commission for FY 2020-21.

Therefore, it revised its petition for approval of the APPC for FY 2021-22 and requested the Commission to set the APPC of ₹2.47 (~$0.0329)/kWh for FY 2021-22.

HPSEBL said it is expected to procure about 10,210 MU at the cost of ₹25.18 billion (~$335.36 million) in FY 2021-22.

In FY 2020-21, the state DISCOM paid ₹137.7 million (~$1.83 million) for transmission system operation and maintenance expenses.

Thereafter, the Commission again issued a public notice in newspapers for suggestions and objections of the stakeholders.

Commission’s analysis

 The Commission has considered net power purchase after excluding central transmission utility (CTU) and state transmission utility (STU) charges, regional load dispatch center (RLDC) charges, and charges paid to Power Grid Corporation of India.

However, the state regulator had considered ₹1.6 billion (~$21.29 million) and ₹144.6 million (~$1.92 million) as power procurement costs from IEX and PXIL while calculating the APPC after excluding CTU and STU charges.

It also considered the total rebate amount of ₹254.3 million (~$3.38 million) from SJVN, NTPC, and NHPC in the calculation of APPC.

The Commission considered the banking energy input to the HPSEBL system at the regional periphery as 122.66 MU at zero cost.

To calculate the APPC, the Commission used ₹2.35 (~$0.031) as the APPC for FY 2020-21 instead of APPC of ₹2.49 (~$0.033) considered in the petition for power purchase of projects up to 25 MW.

The state regulator approved the DISCOM’s request to procure 10,228 MU at the cost of ₹25.42 billion (~$338.19 million) in FY 2021-22.

In July 2021, HPERC issued a generic levelized tariff for solar projects up to 5 MW for FY 2021-22. The Commission considered the normative capacity utilization factor as 21% in line with the Central Electricity Regulatory Commission’s norms to determine the tariff.

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