The Haryana Electricity Regulatory Commission (HERC) has waived off renewable purchase obligation (RPO) backlogs up to 2019 for distribution companies (DISCOMs) in the state and has imposed an additional surcharge on the purchase of open access power in light of the ongoing COVID-19 crisis.
The HERC had issued the order to address the following:
- The true-up for the financial year (FY) 2018-19. Truing-up refers to reconciling the forecasted estimates with actuals, to understand the mismatch in revenue and expenditure so that it can be addressed in the future years.
- To review the annual performance of FY 2019-20
- To ascertain the aggregate revenue requirements (ARR) for the multi-year tariff (MYT) control period starting FY 2020-21 to FY 2024-2025 and
- To determine the distribution and retail supply tariffs for FY 2020-21
The above review was for both the DISCOMs of the state, Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) and Dakshin Haryana Bijli Vitran Nigam (DHBVNL).
The Commission reviewed the performance of state DISCOMs in terms of their RPO targets. It said that there was an acute shortfall in meeting these targets until 2019 and waived the backlogs in a one-time measure given the unprecedented circumstances. The solar and non-solar RPO backlog as of FY 2018-19 is 1850 million units (MUs) and 905 MUs, respectively.
The Haryana Power Purchase Center (HPPC), in its response, listed the steps it has taken towards mitigating these shortcomings, which included its efforts to purchase solar and non-solar based renewable energy. It noted that it also floated solar tenders to procure the required power to meet the targets, but they were not enough to compensate for the inadequacies.
The Commission said it observed that some of the challenges the HPPC faced were because of delayed and denied approvals, frequent policy changes, among other uncertainties on the side of other departments and agencies.
The DISCOMs also stated that the backlog of solar and non-solar RPOs was expected to rise to 1,160 MUs and 3,550 MUs, respectively and that if it weren’t for the challenges mentioned above, the targets could have easily been met. Clearing this backlog would require an additional expenditure of ₹11 billion (~$146.15 million) for purchasing renewable energy certificates (RECs).
The HERC noted that if these backlogs are to be cleared, the costs would invariably be passed on to the consumers. Taking this and the unprecedented COVID-19 crisis into consideration, it waived off the current backlog of RPOs up to FY 2018-19.
“The Commission is of the view that the decision to waive off the current backlog of RPO has been taken at a time which falls in rarest of rare categories and the same should not be set as a precedent.”
It directed DISCOMs to promote solar power purchase and generation as per the national targets. It explained that the RPO targets prescribed by the Commission were only the minimum required benchmarks and that DISCOMs must strive to achieve higher targets.
Additionally, the Commission asked DISCOMS to clear their RPO backlogs from FY 2020-21 along with the next year’s targets by March 31, 2022. After this, carrying forward RPO backlogs would not be allowed. It directed DISCOMs and other obligated entities to submit related information to the state agency by the 10th of every month to help submit quarterly reports to the Commission.
HPPC has informed the Commission that it has signed power purchased agreement (PPAs) with the Solar Energy Corporation of India (SECI) for 1,200 MW of wind power projects with commissioning deadlines ranging from March 2020 to April 2021. Another 97.97 MW of PPAs for waste-to-energy (31.77 MW) and biomass-based projects (66.2 MW) with private tie-ups have been signed. It also has PPAs to procure 2,139 MW of solar power.
DISCOMs also voiced out their grievances arising as a result of industrial customers opting for the open access facility. They said that because of the lower prices for open access power, industrial consumers have started procuring power under open access agreements. They said that this had introduced high variances in their daily peak and off-peak loads.
They stated that the variance between peak and off-peak load demand is extremely high -around 3.848 GW and that the grid could only accommodate surplus generation up to 2 GW. They noted that even after optimizing their resources, they were still only able to bring down surplus generation to around 2.2 GW, which is still higher than recommended. This may result in heavy deviation settlement mechanism (DSM) penalties, which will be transferred to consumers in the form of additional surcharges.
The DISCOMs called for the Commission to impose restrictions or even suspend open access facilities during off-peak hours of the day as required for the duration of the ongoing Coronavirus pandemic.
They sought for restrictions to be imposed by way of additional surcharges of ₹1.15 (~$0.015)/kWh on open access power for the second half of the financial year 2019-2020.
In its order, the Commission said that taking into account all the objections and proposals presented by the DISCOMs and other stakeholders, it would address the issues separately. In the meantime, it allowed DISCOMs to levy an additional surcharge of ₹1.15 (~$0.015)/kWh.
In the same order, the Commission also lowered the power tariff for agro-based industries in the state to ₹4.75 (~$0.063)/kWh from the earlier ₹7.05 (~$0.094)/kWh to help reduce the financial burden caused by the ongoing coronavirus crisis.
In its order, the HERC said that given the circumstances, it would be appropriate to lower the applicable tariff for consumers like the ones in the agro-based industry category who may be paying the same as industrial or commercial consumers.
It imposed a single part tariff of ₹4.75 (~$0.063)/kWh, applicable for consumers in this category with electricity loads up to 20 kW. This was down from ₹7.05 (~$0.094)/kWh, previously. The Commission also set that monthly minimum charges (MMC) for these consumers at ₹235 (~$3.12)/kWh and removed fixed charges.
The Commission issued its revisions based on the outcome of the review and after receiving requests from DISCOMs to retain the existing distribution and retail supply tariffs for the remaining duration of the MYT control period.
It also directed DISCOMS to conduct a detailed study, spanning across consumer categories, and submit it to the Commission within six months from the date of issue of the order to help it take a comprehensive view on the existing distribution and retail supply tariff and changes.
Additionally, the HERC revised domestic supply tariffs to make them adhere more to the actual tariffs than the monthly minimum charges. It explained that the existing monthly minimum charges of ₹115 (~$1.53) per month for loads up to 2 kW and ₹70 (~$0.93) for loads over 2 kW have been encouraging excessive consumption by these consumers (Category-I).
Subsequently, it set energy charges for this consumer category at ₹2 (~$0.027)/kWh for loads up to 50 units per month, and ₹2.50 (~$0.033)/kWh for loads between 51 and 100 units a month. The MMC for these consumers remained the same as before.
The Commission stated that apart from these two categories, the tariffs and charges for all other consumer categories would remain unchanged.
Fully Solarized City
The HERC also directed DISCOMs to coordinate with the Haryana Renewable Energy Development Agency (HAREDA) to fully solarize one city in the state using rooftop solar systems, as per the Prime Minister’s recent recommendation.
In a recent meeting with the Ministry of Power and the Ministry of New and Renewable Energy, Prime Minister Narendra Modi urged every state to have at least one fully solarized city, noting that the city could be the capital or a popular tourist destination and must be powered solely through rooftop solar power.
Previously, the HERC also issued new regulations for single-point supply through rooftop solar and open access projects for residential and commercial consumer categories in the state.
Notably, the Ministry of New and Renewable Energy (MNRE) recently directed the state government of Haryana to honor all the allocations made to the solar power projects and solar parks and treat them as sacrosanct. This directive came on the heels of a letter submitted by Connect Solar on February 14, 2020, in which it had stated that since the last two years, renewable energy developers are being asked to invest in open access solar projects in Haryana and then the new projects are being canceled with newer conditions imposed on them, leading to considerable losses for the developers.
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai.