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Daily News Wrap-Up: APTEL Criticizes MERC for Denying Petitioner Relief

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					</table>Renewable energy project developers have been burdened with delay charges imposed by the Central Transmission Utility of India (<a href="https://powermin.gov.in/en/content/central-transmission-utilityctu" target="_blank" rel="noopener">CTU</a>) for the mismatch between the deployment of long-term access to transmission and the project commissioning date.
CERC needs to officially address the issue to ensure CTU abides by the orders of the Ministry and waves off the charges arising from the mismatch.
Procedure for securing long-term access
Renewable energy developers need long-term access and the right to use the inter-state transmission system to evacuate the power generated by the project to the grid. The application for long-term access is submitted to the CTU once the power purchase (PPA) and power sale agreement (PSA) is signed and the power injection and offtake points are identified. Since the availability of the transmission network is a challenge, developers need to ensure the PPA and PSAs are signed in time to apply for long-term access. Long-term access is generally provided to the developers for 25 years from the scheduled commissioning date of the project.
Confusion with the operationalization of the long-term access
But with the disruptions due to the COVID-19 pandemic, the scheduled commissioning dates of many projects have been moved. Also, there is confusion about the start date of the long-term access. While the CTU says that the long-term access is operational once it is issued, the developers note that the long-term access should be considered from the scheduled commissioning date of the project up to 25 years. According to the developers, the operationalization and commencement date of the long-term access must both be the same – the scheduled commissioning date of the project.
The Ministry of Power had previously <a href="https://mercomindia.com/ministry-of-power-cerc-transmission-charges/" target="_blank" rel="noopener">clarified</a> that when a renewable energy project is granted an extension on its scheduled commissioning date by the concerned implementing agencies, there must be a corresponding change in the commencement and period of long-term access. Such realignment of long-term access was considered to exempt renewable developers from any liability for periods of mismatch in the commissioning of the renewable energy project and the initial date when long-term access was supposed to start. This provision is also extended to projects eligible for the ISTS waiver that are granted an extension by the competent authority.
Why the delayed charges even though the ISTS charges are waived?
The Ministry of Power has <a href="https://mercomindia.com/waiver-ists-charges-solar-wind/" target="_blank" rel="noopener">provided</a> for the ISTS charges waiver for solar and wind energy projects commissioned on or before June 30, 2025. The waiver is for 25 years from the date of commissioning of the projects. Then why the delayed charges for the mismatch?
According to the regulations, the ISTS charges are waived for the developers but socialized for the CTU. “Socialized” in this context means the charges are equally borne by the designated ISTS customers, including state transmission utilities and distribution licensees.
So, from the scheduled date of commissioning of the renewable energy projects and the operationalization of the long-term access, the ISTS charges are socialized for the CTU. This means other designated customers, including the DISCOMs, share the charges. But in the gap between the long-term access issue date and the scheduled commissioning of the project (mismatch), the ISTS charges cannot be socialized, which is a loss for the CTU. Hence, they levy these charges to be paid by the developer.
Solution
The Ministry has issued directions to Central Electricity Regulatory Commission (CERC) to amend the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations 2020. CERC was directed to make provisions for the CTU to extend the long-term access start date in a case where the scheduled commissioning dates of the renewable projects was extended, addressing the mismatch. But the CERC is yet to amend the regulations and notify it.
According to the developers, despite the Ministry&#8217;s orders, the CTU has been raising bills for the period of mismatch in commissioning a renewable energy project and the date of operationalization of long-term access in periods before commissioning such renewable projects.
A leading developer Mercom spoke to said that since the developers have a deadline extension to commission the projects, there will be a mismatch in the long-term access approvals.
&#8220;Developers were granted long-term access start dates based on the original commissioning date of the projects. Now, if the commissioning dates are moved, developers end up paying the penalty for no fault of theirs. The Ministry has directed CERC that long-term access also must be extended, but no order has been issued yet. This needs to be addressed immediately,&#8221; he said.
Developers claim CTU is proceeding on the understanding that none of the Ministry&#8217;s orders referenced above have any application whatsoever to bilateral mismatch liability. Even in cases where long-term access has been granted on existing margins, the CTU is raising bills on renewable power producers who are otherwise eligible for relief under the Ministry&#8217;s orders.

Developers Bear the Cost of Mismatch in Long-Term Access & Solar Project Commissioning

Independent power producer <a href="https://www.azurepower.com/" target="_blank" rel="noopener">Azure Power</a> had recently approached the Central Electricity Regulatory Commission (<a href="http://www.cercind.gov.in/" target="_blank" rel="noopener">CERC</a>), seeking a deadline extension from Power Grid Corporation of India Limited (PGCIL) to lay the transmission lines.
In response to the appeal, CERC, in a recent order, directed Azure Power to file an affidavit, explaining the current developments leading to delay in commissioning the 1,200 MW of solar projects being developed in Rajasthan. Azure Power has been asked to submit its response by May 14, 2021.
Azure Power had further appealed to the Commission to direct PGCIL to not penalize for the delay in commissioning of the transmission line and the pooling substation. Taking cognizance of the request, the Commission noted that the central transmission utility would not take any coercive action against the company during the hearing. The Commission also asked PGCIL to file its reply by May 24, 2021.
Azure Power filed a petition with the Commission requesting it to direct PGCIL to extend the start date for the long-term access and the deadline for the completion of the dedicated transmission line and the pooling substation to match with the extension of the commissioning dates of the projects.
Background
Azure Power is developing 1,200 MW of solar projects in Rajasthan and has obtained long-term access for 1,200 MW (600 MW for Bhadla and 600 MW for Bikaner) per the terms of the agreements signed with PGCIL.
However, the commissioning of the projects was delayed, and later, the commissioning dates of the projects were extended by the Solar Energy Corporation of India (<a href="https://www.seci.co.in/" target="_blank" rel="noopener">SECI</a>).
Following this, Azure Power requested PGCIL to extend the long-term access start date and deadlines to complete laying the transmission line and the pooling substation in agreement with the extended commissioning dates for the projects. However, PGCIL did not accept the request.
After the filing of the petition, certain developments took place, as SECI extended the commission dates of the projects further. The Ministry of Power also issued an order stating that the long-term access and the commissioning of the transmission facilities also be <a href="https://mercomindia.com/power-transmission-projects-affected/" target="_blank" rel="noopener">extended</a> by five months.
Commission&#8217;s Analysis
Considering the events that took place after the filing of the petition, the Commission has asked Azure Power to file an affidavit by May 14, 2021, to bring on record the recent developments that took place with the projects.
The petition will be listed for hearing in due course, for which a separate notice will be issued.
In February this year, CERC <a href="https://mercomindia.com/cerc-revises-connectivity-guidelines-ists/" target="_blank" rel="noopener">approved</a> the revised guidelines for interstate transmission system connectivity to renewable energy projects. As per the revised rules, the procedure will apply to central transmission utility, regional load dispatch centers, state load dispatch centers, state transmission utility, concerned distribution companies, and implementing agencies.
Earlier, CERC had <a href="https://mercomindia.com/cerc-dismisses-plea-connectivity-subsidiaries/" target="_blank" rel="noopener">dismissed</a> a solar developer&#8217;s plea for utilizing connectivity and long-term access to its two wholly-owned subsidiaries and said the move was not permitted. If the parent company exercised its control over more than 50% of the company&#8217;s voting shares directly or indirectly, the request for long-term access and utilization of connectivity for its subsidiaries could not be approved, it had said.
Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates </a>to ensure you don&#8217;t miss any critical updates from the renewable industry.

Solar Developer Seeks CERC’s Help to Align Long-Term Access with Project Commissioning

In a recent order, the Central Electricity Regulatory Commission (<a href="http://www.cercind.gov.in/" target="_blank" rel="noopener noreferrer">CERC</a>) has dismissed the petition filed by <a href="https://renewpower.in/" target="_blank" rel="noopener noreferrer">ReNew Solar Power Private Limited</a> for the exemption of relinquishment charges.
The Commission said that there would be no exemption from the payment of relinquishment charges either for a conventional or a renewable energy generator. Relinquishment charges are those that a power generating company has to pay if it decides to surrender its transmission network for various reasons like a lack of power demand.
The order added that the calculation of relinquishment charges depends on various factors such as the notice period, load flow scenario, and applicants for the grant of long-term access (LTA) against the relinquished capacity in the same corridor.
In this case, the Commission has observed that unless the petitioner (ReNew Power) relinquishes the LTA, it would not be possible for Power Grid Corporation of India (PGCIL) to calculate such charges. The CERC added that it had provided a detailed methodology for carrying out the calculations, and ReNew Power can make an estimate based on the methodology and available information.
Background
ReNew Solar Power Private Limited had filed a petition before the CERC requesting the Commission to direct the Power Grid Corporation of India Limited to pre-disclose the relinquishment charges payable before accepting its formal application seeking the relinquishment of open access rights.
ReNew was approved for LTA for its 250 MW solar project at Bikaner on a target region basis (Western Region).
In February 2019, the solar developer also executed a long-term access agreement with PGCIL. The petitioner had sought a solution for the issues relating to the relinquishment charges in the case of renewable projects.
The Commission directed PGCIL to conduct load flow studies to calculate if there’s any stranded capacity created when an entity relinquishes its LTA and then calculate the charges.
The connectivity regulations do not provide any basis for the calculation of compensation to be paid by a long-term open access customer to avail the right to relinquish open access.
According to the petition, the input data for calculating the stranded capacity and relinquishment charges was not available to ReNew Power.
PGCIL and Power system Operation Corporation Limited (POSOCO) are not only the two companies that store such data, but they also store information required for calculating stranded capacity and relinquishment charges.
To bring transparency in the process, the Commission, in its earlier order, had directed the PGCIL to provide information and documents that were necessary for verifying relinquishment charges to power developers.
The Commission also held that the relinquishment charges would be like a compensation, which will be payable to PGCIL for the infrastructure built for the developers.
Ever since the cost of transmission infrastructure has been socialized and the transmission charges have been exempted, there has been no occasion where the renewable energy developers could compensate PGCIL in case of relinquishment of open access.
Hence, the petition states that the pre-disclosure of relinquishment charges is necessary for renewable energy projects as these projects are exempted from payment of transmission of charges by the central government.
PGCIL and POSOCO being the repository of all the transmission related data, are in a better position to examine the requests made by the developers. If a payment of certain costs towards the undertaking system studies is made, then they can pre-disclose the relinquishment charges to the renewable power developer.
So, the petition argued that it is only fair if the compensatory payment is pre-disclosed before it is imposed upon the renewable power developer for relinquishing open access rights.
It further states that since the relinquishment charges are to be calculated based on the transmission charges, it is important to get clarity from the Commission regarding the payment of these charges where the developer has been exempted from the payment of transmission charges.
In its order, the Commission noted that the contention of the petitioner was misplaced. A renewable power project is exempted from the payment of transmission charges and losses for the use of the transmission system, only if it satisfies the conditions of the waiver of transmission charges and losses. However, there is no exemption from the payment of relinquishment charges, and it will have to be paid. Stating this, the petition was rejected.
Notably, the Ministry of Power <a href="https://mercomindia.com/no-ists-charges-solar-wind-december-2022/" target="_blank" rel="noopener noreferrer">announced</a> that the inter-state transmission system charges and losses on the transmission of electricity generated from solar and wind energy projects would be waived as long as they are commissioned before December 31, 2022.
Recently, the central body also <a href="https://mercomindia.com/cerc-lists-conditions-waiver-of-bank-guarantee/" target="_blank" rel="noopener noreferrer">shed light</a> on the conditions required for the exemption of construction phase bank guarantee for an applicant who fulfills the exemption eligibility criteria for long-term access to power.
Earlier, the CERC <a href="https://mercomindia.com/cerc-guidelines-transmission-solar-wind/" target="_blank" rel="noopener noreferrer">issued</a> new guidelines for inter-state transmission system charges and losses. The guidelines highlight the responsibilities of the nodal agencies and the calculation of inter-state transmission charges and losses for solar and wind projects.

CERC Rejects Solar Developer’s Petition for Exemption of Relinquishment Charges

The Ministry of New and Renewable Energy (<a href="https://mnre.gov.in/" target="_blank" rel="noopener noreferrer">MNRE</a>) has designated National Thermal Power Corporation (<a href="https://www.ntpc.co.in/" target="_blank" rel="noopener noreferrer">NTPC</a>) as the renewable energy implementing agency to facilitate the application of connectivity and long-term access (LTA) in the interstate transmission system network.
According to the Central Electricity Regulatory Commission (CERC), a renewable energy implementing agency is a company or an entity designated by the central or state government to act as an intermediary procurer to select and buy power from renewable energy generating stations and sell it to one or more distribution licensees. The agency can act as a facilitator for those projects which are based on standalone storage sources of installed capacity of 50 MW or above.
Earlier, the CERC <a href="https://mercomindia.com/cerc-procedural-guidelines-ists/" target="_blank" rel="noopener noreferrer">released</a> procedural regulations for granting ISTS connectivity to renewable energy projects. It was stated that the connectivity application would be processed in two stages. Those developers who were interested in setting-up renewable generation projects and had a minimum capacity of 50 MW were asked to apply for connectivity.
Previously, the central body also <a href="https://mercomindia.com/cerc-regulations-ists-implementation-country/" target="_blank" rel="noopener noreferrer">issued regulations</a> to lay down the broad principles, procedures, and processes to be followed for the planning and development of the ISTS network for the smooth flow of electricity from generating stations to the load centers. These regulations were expected to help in the timely development of ISTS in India. ISTS is of utmost importance for the growth of solar and wind as all areas do not have the same solar potential or land availability. ISTS is required to realize the potential of solar-rich states.
Besides thermal power production, NTPC has also been focusing on renewable power, especially solar. According to Mercom’s <a href="https://mercomindia.com/product/india-solar-tender-tracker/" target="_blank" rel="noopener noreferrer">India Solar Tender Tracker</a>, NTPC has 875 MW of large-scale solar projects in operation, and about 2.1 GW capacity is currently under development.
Recently, it also <a href="https://mercomindia.com/ntpc-notice-inviting-tender-solar-projects/" target="_blank" rel="noopener noreferrer">floated</a> an invitation for bids for the selection of solar power developers for setting up 1,200 MW of ISTS-connected solar projects in India.

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