Punjab Regulator Allows DISCOM to Carry Forward RPO Shortfall to FY 2023-24

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The Punjab State Electricity Regulatory Commission (PSERC) has allowed the state distribution company (DISCOM) to carry forward its renewable purchase obligation (RPO) shortfall for the financial year (FY) 2021-22 and FY 2022-23 to FY 2023-24.

While allowing the DISCOM’s petition, the Commission noted that the petitioner expected to achieve more than the specified RPO target of 27% in FY 2023-24 even with the carry forward of the RPO backlogs from FY 2021-22 and FY 2022-23.

The petition was filed by the Punjab State Power Corporation (PSPCL).

Background

The Commission had earlier specified the RPO targets in the state for FY 2021-22 at 8% for non-solar and 6.5% for solar power. However, it brought down the targets by 0.3% and 1.5% respectively in the aftermath of the second wave of Covid-19. Accordingly, the RPO obligation for FY 2021-22 was set at 7.7% for non-solar and 5% for solar. 

PSPCL stated that despite its best efforts to secure renewable power, it could not achieve the RPO targets for FY 2021-22.

It added that it was facing several challenges in meeting the RPO. Resources for non-solar renewable power were very limited in Punjab and hydel sources stood almost fully utilized.

Punjab Energy Development Agency (PEDA), in its reply, said that PSPCL had been consistently varying the figures of energy and seeking to carry forward the shortfall in RPO for the last many years on one or another pretext. PSPCL could not be allowed to take unwarranted benefits citing Covid-19. It was the faulty planning of PSPCL that had led to a shortfall in RPO compliance.

PSPCL stated that in terms of the Ministry of Power notification, energy procured from all hydropower projects would be considered to meet the RPO compliance under the ‘other RPO’ category from FY 2022-23.

Accordingly, PSPCL reworked its RPO compliance calculations and noted that it would be surplus in the ‘other RPO’ category for the FY 2022-23 even with the carry forward of the shortfall for the FY 2021-22.

However, in December 2022, the Commission notified the Renewable Purchase Obligation and its Compliance Regulations, 2022, stipulating that the same would come into force from April 01, 2023.

PSPCL noted that it would be unable to meet the RPO for FY 2022-23, as per the new regulations.

Commission’s analysis

The Commission observed that it could not achieve the RPO targets for FY 2021-22 mainly because the projections for FY 2021-22 went awry due to Covid-19 and its impact on the demand and supply of energy.

The state DISCOM submitted that given the fact that the new RPO regulations would be applicable only after FY 2022-23 and the benefit of hydel energy to be counted as renewable power would also be effective only from April 1, 2023, it would not be able to meet the RPO target for FY 2022-23 under the old regulations.

The Commission noted that PSPCL must achieve an RPO target of 27% of the total input energy in FY 2023-24 which is equivalent to 17,724.38 MU.

The petitioner had submitted that based on the projections, it expected to be in RPO surplus by 114.03 MU for FY 2023-24, even with the carry forward for RPO shortfall for FY 2021-22 and FY 2022-23.

PSERC stated that the consumers would be directly impacted by the financial implications of the procurement of renewable energy certificates if the carryover of RPO shortfall was disallowed. The financial burden based on the prevailing market rates would be around ₹3.5 billion (~$42.54 million).

Considering the facts, the Commission decided to allow the carryover of the RPO shortfall to FY 2024.

The Commission observed that the DISCOM’s endeavor was evident from the incremental achievement of RPO compliance which was 3,339 MU, 4,151 MU, and 4,722 MU for the last three years.

Earlier, PSERC had ruled that power generated from co-firing biomass would be considered renewable energy and eligible for meeting the non-solar RPO of obligated entities.

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