Wheeling Charges in Karnataka Increase Five-Fold

A group of six independent power producers (IPPs) had filed separate petitions before the Rajasthan Electricity Regulatory Commission (RERC) for the settlement of disputes regarding the methodology adopted by DISCOMS in levy of wheeling charges.

The six petitioners, who are wind and solar energy generators for captive uses, had entered into a Wheeling and Banking Agreement (WBA) with the concerned DISCOMS.

Regulation 86 (4) of the RERC states that while determining the wheeling charges for open access customers, the total electricity wheeled on the licensee’s distribution system will be considered. Simply put, it states that the determination of wheeling charges will be based on the energy wheeled.

The RERC order has found that the DISCOMS, until November 2017, had levied the wheeling charges based on the units of energy wheeled. Then from December 2017, it imposed wheeling charges considering 100% capacity utilization factor (CUF) for solar or wind projects, as against the normative CUF of 20% specified by the commission.

The method of calculating the wheeling charges considering 100% CUF is contrary to the terms and conditions of the agreement and regulations, the RERC felt, as the levied wheeling charges were five times higher than the charges as per the WBA norms of the commission.

Levy of excess wheeling charges is also in violation of the Electricity Act, 2003, the RERC order noted.

“Commission has already determined the wheeling charges which are payable on the basis of the units of the energy wheeled. Any other method adopted by respondents is in violation of above mentioned provisions of Electricity Act, 2003,” the commission stated.

The RERC, in its order, noted that the core issue in the matter is whether the wheeling charges should be imposed on capacity contracted or the energy wheeled.

The commission in its order further noted that the respondents had calculated the wheeling charges taking into consideration as if the distribution system is being utilized by the petitioners for wheeling of electricity and their contract demand for 24 hours for all the days of the month.

The commission observed that it is erroneous as the CUF of solar and wind projects is 20%. Further, the distribution system is not utilized for 24 hours as the electricity is generated for a limited period in a day and also the distribution system of the respondents is not solely utilized by the petitioners, but it is also utilized by various generators.

Observing these loopholes, the commission decided to dismiss the petitions, adding that the total energy based on the contracted capacity or the energy utilized by an open access consumer, whichever is higher, is the energy on which wheeling charges have to be levied. It cannot be imposed on any other basis.

Recently, the Karnataka High Court quashed an order issued by the Karnataka Electricity Regulatory Commission (KERC) relating to an increase in wheeling charges for open access power consumers in the state. The Karnataka High Court order has brought relief to all renewable energy generators trading power through open access in Karnataka.

Then, in March 2019, the Haryana Renewable Energy Development Agency (HAREDA)  amended a provision related to the exemption of wheeling, transmission, cross-subsidy charge, and additional surcharges in its solar policy.