Ministry Issues Guidelines for Optimum Utilization of Power Generation Capacity

The Ministry of Power (MoP) has approved the guidelines for optimum utilization of power generation capacity. As per the tariff policy, power generating stations must always be available and ready to dispatch.

The MoP said that it had been brought to the government’s notice that some power plants were not generating their total capacity at any given time. The capacity remains idle as it is tied up under power purchase agreements (PPA).

The guidelines, approved by Power Minister RK Singh, are intended to overcome this shortcoming.

For optimum utilization of the unrequisitioned capacity of any generating stations regulated under Section 62 and those having PPA under Section 63 of the Electricity Act, 2003, the generators have been permitted to sell power in the exchange in line with the policy laid down by the central government.


The guidelines provide that where the procurer does not requisition power from the power plant with which the PPA has been signed, the generator can sell the unrequisitioned power in the power exchange up to 24 hours before 00:00 hours of the day of power delivery.

In cases where the procurer does not schedule power for any period from the generating station with which the PPA has been signed, the generator can sell the power for the period for which it has not been requisitioned in the power exchange.

The profit from the sale will be calculated as the difference between the selling price of such power and the energy charge rate (ECR) as determined under Section 62 or Section 63 of the Electricity Act, 2003. The fixed charges obligation for the procurer will remain the same as per the PPA.

These provisions will apply to the power plants whose tariff has been determined under Section 62 or Section 63 of the Electricity Act 2003. Under Section 62, it is specified that the state regulatory commissions will determine the tariff for the supply of electricity by a generating company to a distribution licensee. Section 63 states that when the tariff has been determined in a competitive bidding process, the appropriate Commission will adopt such a tariff.

The MoP had released the framework for implementing the Market-Based Economic Dispatch (MBED) – Phase 1 program to reduce consumers’ power purchase costs by 5%. MBED will ensure that the cheapest generating resources are dispatched to meet the overall system demand.

Mercom had earlier reported that the ministry had decided to set up an integrated day-ahead market (DAM) at the power exchanges with different price formations for power generated from renewable energy and conventional power.