Madhya Pradesh Clarifies Cross Subsidy Surcharge Exemption for Captive Power Projects

The Madhya Pradesh Electricity Regulatory Commission (MPERC) has dismissed two petitions filed by owners of bagasse-based cogeneration projects against the imposition of cross subsidy surcharge for self-consumption of power.

Shri Durga Khandsari Sugar Mills had petitioned MPERC to direct Madhya Pradesh Paschim Kshetra Vidyut Vitaran Co. Ltd., to not impose cross subsidy on self-consumption of the electricity from its own bagasse-based cogenerating stations. It had requested the commission to declare that the imposition of cross subsidy surcharge is not legally binding and further direct the distribution company (DISCOM) to refund all the amount paid by the mill so far. Narmada Sugar Private Limited had also petitioned MPERC to issue the same directions to the DISCOM.

In the first case of Shri Durga Khandsari Sugar Mills, MPERC stated, “Out of total installed capacity of 11 MW, petitioner is only consuming 3 MW power in its sugar factory and 8 MW power is being sold through energy exchange. Thus, the petitioner’s own consumption is less than 30 percent of its generating capacity and condition of at least 51 percent of captive consumption is not satisfied. Therefore, whole power supplied by the cogeneration plant of the petitioner will be treated as if the power is supplied by a generating company.”

In the case of Narmada Sugar Private Limited the MPERC stated, “Out of the total installed capacity of 30 MW the petitioner is consuming only 8-9 MW power in its sugar factory leaving remaining power to be sold through energy exchange. The petitioner’s own consumption is less than 30 percent of its generating capacity and, therefore, does not fulfill the criteria of minimum 51 percent consumption. Therefore, whole power supplied by the cogeneration plant of the petitioner will be treated as if the power is supplied by a generating company.”

Previously, the MPERC kept the must-run status intact for power generation from wind, solar, small hydro and municipal solid.

Biomass and bagasse cogeneration are two areas with untapped potential in India’s renewable growth story. To this effect, in October 2018, the Ministry of New and Renewable Energy (MNRE) invited Expression of Interest (EOI) to assess the potential of biomass power and bagasse cogeneration in India.

Another program to support the promotion of biomass-based cogeneration in sugar mills and other industries was also announced in May by MNRE’s biomass power division.

Recently, the central government’s cabinet approved the National Policy on Biofuels – 2018.

Image credit: MNRE

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.