The Rajasthan Electricity Regulatory Commission (RERC) has approved the levy of Parallel Operation Charges (POC) on co-located captive power projects (CPPs).

The Commission has set the charges at ₹27.23 (~$0.30)/kVA/month of installed capacity for conventional CPPs and ₹11.90 (~$0.13)/kVA/month for renewable energy CPPs. For hybrid plants, the charges will be applied proportionally based on the share of conventional and renewable components.

Background

RERC first introduced POC in 2020, at a uniform rate of ₹20 (~$0.22)/kVA/month for all CPP consumers. This order was later set aside by the Appellate Tribunal for Electricity (APTEL), which directed RERC to reconsider the matter based on a new proposal from the distribution licensees.

In compliance with the directive, the three state distribution companies (DISCOMs), Jaipur Vidyut Vitran Nigam (JVVNL), Ajmer Vidyut Vitran Nigam (AVVNL), and Jodhpur Vidyut Vitran Nigam (JdVVNL), appointed the Electrical Research and Development Association (ERDA) to conduct a technical study to determine a scientific basis for the charges.

The petition for approval of POC for FY 2024-25 was filed on July 1, 2024, and public consultation was conducted between August 2024 and February 2025. Six stakeholders submitted comments, and the matter was heard on February 27, 2025.

The DISCOMs argued that CPPs benefit from the grid acting as an “infinite bus,” providing higher fault levels, voltage stabilization, and harmonic absorption. They stated that CPPs use the grid to manage peaks, ensure continuous supply, and bank surplus power.

Stakeholders, however, opposed the charges, calling them arbitrary and amounting to double-billing, as CPPs already pay transmission and wheeling charges. They also raised objections regarding the legal validity of the petition and the technical soundness of the ERDA study.

Commission’s Analysis

The Commission referred to APTEL’s earlier judgments that upheld the authority of state commissions to levy POC. It noted that the benefits derived from parallel operation with the grid, such as load stabilization, harmonic absorption, and transient surge protection, justify the imposition of the levy.

It confirmed that the applicability of POC is limited to co-located CPPs since off-site projects using the grid for wheeling power are comparable to retail consumers.

The Commission emphasized that the POC is a separate levy, not a tariff revision, and rejected objections related to annual tariff limits. The ERDA study’s methodology, which utilized the Base MVA and Power Quality methods, was found to be scientifically sound.

The Commission set the charges at ₹27.23 (~$0.30)/kVA/month for conventional CPPs and ₹11.90 (~$0.13)/kVA/month for renewable CPPs. For hybrid projects, the fees will be proportionally charged according to the share of conventional and renewable components.

The regulator clarified that rooftop solar projects operating under net metering or gross metering will be excluded from the levy, as will capacities already covered under power purchase agreements with DISCOMs.

The levy will be limited to the power consumed by on-site or co-located loads and will apply to the net capacity, defined as the total installed capacity minus the open access capacity.

RERC also directed DISCOMs to include revenue from POC in their future annual revenue requirement and true-up petitions.

The Commission directed that the approved charges will not apply for the financial year (FY) 2024-25 but will come into effect prospectively from FY 2025-26 as part of the DISCOM’s ARR and Tariff Order.

The order establishes a regulatory precedent that distinguishes between co-located and off-site captive generation, ensuring future financial transparency through mandatory revenue reporting by the DISCOMs.

Recently, RERC issued draft regulations to establish a comprehensive regulatory framework for the planning, procurement, deployment, and utilization of battery energy storage systems.

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