The Central Electricity Regulatory Commission (CERC) has directed three distribution companies in the state of Rajasthan to pay ₹313.4 million (~$4.4 million) that’s due to NTPC Vidyut Vyapar Nigam Limited (NVVN). The commission has asked the DISCOMs to pay the amount along with late payment surcharge of 1.25% per month on the outstanding amount calculated on a day to day basis.
To facilitate the implementation of Jawaharlal Nehru National Solar Mission (JNNSM), the government had designated NVVN as the nodal agency for the procurement of solar power by entering into PPAs with solar power developers and selling the power bundled with equivalent unallocated MW capacity from NTPC coal stations to the distribution licensees in the country.
In the petition, NVVN states that DISCOMs are required to pay the applicable tariff for the bundled power. It adds that the power sale agreement for the projects provides the monthly tariff payment computation for the bundled power with one of the components expressly provided as the “trading margin.” Simply put, the trading margin is the amount which is to be appropriated by NVVN as mutually agreed in the agreement. In this case, the trading margin agreed among the parties was ₹0.07 (~$0.00098)/kWh. However, the DISCOMs have unilaterally paid the trading margin only at the rate of ₹0.015 ($0.0002)/kWh.
NVVN claims that Rajasthan DISCOMs have made wrongful adjustments towards an alleged claim for the shortfall in the generation for the period from January 2011 to June 2017. NVVN has also stated in its petition that the distribution licensees in other states who are procuring bundled solar and coal-based power similarly have not raised any dispute on the payment of trading margin of ₹0.07 (~$0.00098)/kWh.
The commission observed that as per the PSA signed in 2011, the NVVN was bound to sell bundled power to these DISCOMs. NVVN had supplied 60.12 MUs of solar power, which included 42.35 MUs of solar power from December 24, 2012, to April 5, 2013, and 7.7 MUs of solar energy from June 19, 2013, to September 17, 2019, without the supply of coal power. NVVN raised the bill amounting to ₹545.8 million (~$7.6 million) at the rate of unbundled solar power. However, the amount paid by the DISCOMs amounted to ₹234 million (~$3.3 million), which meant that there was a shortfall of ₹313.4 million (~$4.4 million).
Considering this, the commission has directed the DISCOMs to pay the petitioner ₹313.4 million at the earliest. Moreover, the commission has directed the DISCOMs to pay the due amount to NVVN and with a late surcharge of 1.25% per month on the outstanding amount calculated on a day-to-day basis.
According to the Central Electricity Authority (CEA) data, 472 renewable energy generating projects spread across the states of Andhra Pradesh, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Odisha, Tamil Nadu, Rajasthan, Telangana, and Uttar Pradesh, had dues totaling ₹82.3 billion (~$1.14 billion) as of July 31, 2019.
Recently, the Ministry of Power recently released its seventh annual integrated ratings for the state distribution companies. The Investment Information and Credit Rating Agency (ICRA) and Credit Analysis and Research (CARE) were the designated rating agencies.
All the DISCOMs in Rajasthan remained at a ‘B’ rating. Two of the utilities had been upgraded last year from a ‘C+’ rating. The lack of upgrades in Rajasthan was attributed to concerns about the low-cost coverage ratio, low collection, billing efficiency, and high power purchase cost.
Moreover, Rajasthan’s Solar Energy Policy 2019 aims to deploy 25 GW of solar energy capacity in the state by 2020-2021 and 50 GW over the next 5-6 years to meet the renewable purchase obligations (RPOs) of distribution companies.
Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU).