The Gujarat Electricity Regulatory Commission (GERC) has revised the state renewable purchase obligation (RPO) for entities in the state for the financial year (FY) 2013-14 retroactively.
The order came after the completion of suo motu proceedings in order to verify the compliance of the RPO by the distribution licensees (DISCOMs) and in case of default, to decide the appropriate actions required.
The GERC had initiated suo motu proceedings against Madhya Gujarat Vij Company Ltd., Dakshin Gujarat Vij Company Ltd., Uttar Gujarat Vij Company Ltd., Paschim Gujarat Vij Company Ltd., Torrent Energy Ltd., Kandla Port Trust, MPSEZ Utilities Pvt. Ltd., Jubilant Infrastructure Pvt. Ltd., Aspen Infrastructure Ltd., and Gujarat Energy Development Agency (GEDA).
After going through the submissions made by the parties, the state commission decided to consider the actual level of RPO achievement for the state arrived at after considering the weighted average of RPO compliance level as the revised RPO.
According to the Appellate Tribunal for Electricity (APTEL), “If the RPO targets are revised due to inadequate capacity addition in a resource rich state, such reduction has to be uniform for all the entities.”
The Gujarat commission is of the view that the impact of non-revision of RPO targets will ultimately be borne by the consumers. Therefore, it has decided to retroactively revise the wind RPO for FY 2013-14 from 5.50 percent to 5.04 percent, and for other category of renewable energy from 0.50 percent to 0.11 percent.
The GERC observed that even if solar RPO is revised retroactively for FY 2013-14, it would be more than the specified solar RPO of 1 percent for that fiscal, hence the commission has decided to keep solar RPO at 1 percent.
In its order, the commission also stated that to fulfill the shortfall in RPO for FY 2013-14, even after the revision, the entities must procure either the required units of renewable energy or renewable energy certificates (RECs) in addition to the RPO compliance for FY 2018-19.
“Changing RPO targets retroactively after 5 years does not set a good precedent. DISCOMs can simply miss targets and go back to the courts to get the targets reduced,” said Raj Prabhu, CEO of Mercom Capital Group.
In June 2018, the Ministry for Power had set solar RPO for FY 2019-2020 at 7.25 percent and non-solar RPO at 10.25 percent. To ensure compliance, the Ministry of New and Renewable Energy (MNRE) has also created RPO Compliance Cell.