Punjab Allows Carry Forward of RPO Shortfall Due to COVID-19

The Punjab State Electricity Regulatory Commission (PSERC) has approved the carry forward of the shortfall in the compliance of renewable purchase obligation (RPO) in FY 2019-20 to FY 2020-21.

The Commission said that the procurement of renewable energy certificates (RECs) to comply with this shortfall would put a considerable financial burden on the Punjab State Power Corporation Limited (PSPCL) and, consequently, on the consumers. The Commission allowed 3.5% (both for solar and non-solar combined) reduction in the RPO target for FY 2020-21.

The Commission added that the recovery of fixed charges as energy charges for two months in the case of medium supply (MS) and large supply (LS) consumers is not a viable proposition. Instead, the Commission allowed the recovery of these deferred charges by PSPCL in six monthly installments without any late payment surcharge. The first installment will be raised in the bill of September 2020 and the last in the bill of February 2021.

Background


Earlier, the Punjab government had issued directions for the exemption of fixed charges for medium and large supply industrial consumers for two months from March 23, 2020, considering the lockdown.

The government had also directed the Commission to reduce the RPO for FY 2019-20 and FY 2020-21 by 1.50% and 2%, respectively.

The state DISCOM had said that the fixed charges for the two months could be recovered by enhancing the per unit energy charges for these two months by 12.32% and 19.93%, respectively.

It addedthat there would be an RPO shortfall of solar and non-solar by 140.71 million units (MUs) and 495.67 MUs approximately for FY 2019-20.

Further, the state DISCOM had said that as per approved RPO targets for FY 2020-21, there would be a shortfall of 899.26 MUs and an amount of ₹2.2 billion(~$29.3 million) would be required for the purchase of RECs corresponding to this shortfall. Therefore, PSPCL requested the Commission to reduce the solar and non-solar target for the FY 2019-20 and 2020-21 by 1.50% and 2.0 %, respectively.

The state DISCOM had further noted that due to the lockdown from March 23, 2020, the actual industrial consumption had been minimum, and it would not be possible to recover exempted fixed charges from the energy charges of these two months.

Many stakeholders voiced their objections to the petition. The main objections submitted were:

  • The industrial category objected to PSPCL’s proposal for recovery of fixed charges by enhancing per unit energy charges by 12.32% and 19.93%.
  • No fixed charges should be payable for the shutdown period as the lockdown was imposed by the state and the central governments and industry had no option but to accept it.
  • There would not be any loss to PSPCL as the government has directed the Commission to reduce the RPO target for the FY 2019-20 and FY 2020-21, which would provide relief to PSPCL amounting to ₹3.2 billion (~$42.73 million).

The Commission noted that it agreed with PSPCL’s submission that it would not be possible to recover the total fixed charges through the energy charges of these two months. The Commission said that a uniform formula is not suitable for the recovery of fixed charges through energy charges as different consumers have different utilization factors.

Recently, PSERC announced that it had reduced the late payment surcharge (LPS) to 0.75% per month.The reduced rate of LPS will be applicable for payments that were delayed beyond the due date during the period between March 24, 2020, and June 30, 2020.

Earlier, considering the unprecedented situation, PSPCL in a letter to developers requested them to provide a 10% discount on the power tariff to be billed from July 01, 2020. The letter noted that the ensuing COVID-19 pandemic and the subsequent lockdown affected the collection of PSPCL, which provided constant power supply to health centers, hospitals, and quarantine centers across the state for their smooth functioning.

A while back, the state also introduced an innovative plan calling on all its consumers to make payment in advance towards their estimated electricity bills up to March 2021. The customers can pay to the extent they can through digital modes and earn interest @1% per month on the advance payment. The DISCOM had stated that it had received an advance payment of ₹350 million ($4.61 million) in less than a week.