Green Power Tariff

The Maharashtra Electricity Regulatory Commission (MERC) has, in a recent order, allowed a ‘Green Power Tariff’ of ₹0.66 (~$0.009)/kWh to be levied on consumers opting for 100% green energy.

The Commission noted that all consumers, including extra high voltage, high voltage, and low voltage categories, will be eligible to opt for 100% renewable power on the payment of the Green Power Tariff.

Tata Power Company-Distribution (TPC-D) had filed a petition seeking approval for the ‘Green Power Tariff’ for consumers meeting their requirements through 100% renewable energy.

Background


In its submission, TPC-D said:

  • Green Power Tariff being voluntary would give a choice to the consumers to opt for green energy.
  • The extra charges for the procurement of renewable energy being charged from the specific consumers would not increase the cost borne by other consumers.
  • This would also reduce hesitation on the part of the distribution companies (DISCOMs) going for the high cost of power purchase from renewable sources, as it will not affect the general tariff.

Considering the methodology adopted by the Karnataka Electricity Regulatory Commission (KERC), TPC-D computed the Green Power Tariff to be paid by the consumers as ₹0.56 (~$0.007)/kWh.

In its submission, TPC-D said that the methodology adopted by it was similar to the one approved by KERC. It insisted that there should be a standard methodology for calculating the Green Power Tariff and the standard procedure should be followed by all the DISCOMs.

TPC-D said that green power would be supplied to the consumers from the TPC-D’s available renewable sources portfolio.

The DISCOM would arrange for additional renewable energy only if the renewable power requirement was more than the existing tied-up renewable power capacity. As the existing tied-up capacity was being used for renewable purchase obligation (RPO) compliance, it would be appropriate to give the same treatment to the additional renewable energy purchased for consumers opting for 100% renewable power consumption.

Commission’s Analysis

The Commission noted that TPC-D was trying to address the concerns of consumers who wish to source all their power requirements from renewable energy only.

The Commission said that TPC-D’s proposal would help increase awareness amongst the consumers about the use of renewable energy.

The state regulator observed that computing the cost of Green Power Tariff based on the average cost of renewable energy sources was the correct approach.

Considering difficulties in stipulating DISCOM-wise Green Power Tariff, the Commission ruled that the tariff would be uniform for all DISCOMs in the state.

Consumers Opting for 100% Renewables to Pay ‘Green Power Tariff’ of ₹0.66/kWh

The Commission arrived at a figure of ₹1.33 (~$0.018)/kWh to be considered as the Green Power Tariff. The Commission decided to levy only 50% of the tariff determined, which is ₹0.66 (~$0.009)/kWh.

The regulator noted that TPC-D’s contention that it had to maintain separate cost allocation for the consumers could not be termed as the primary function of DISCOM, which is to supply energy. Therefore, the revenue from the green tariff will be part of the regular annual recurring revenue.

The Commission also added that it had set out an increasing trajectory to fulfill RPO compliance by the obligated entities. Complying with the same necessitates DISCOMs to tie up with various renewable sources. The DISCOMs would require an additional purchase of renewable power corresponding to the increasing trajectory.

“Given this, if the consumer is not an obligated entity under RPO Regulations, it would be appropriate to count that energy towards RPO fulfillment of the DISCOM which will reduce the additional cost of the utility for purchasing the same and ultimately benefit its consumers,” the Commission said.

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