The Grid Controller of India (POSOCO) has released an updated procedure to implement the Electricity (Late Payment Surcharge and Related Matters) Rules 2022 and subsequent amendments. The procedure applies to intra-state and inter-state generators, licensees, and distribution entities, focusing on payment security, power scheduling, and addressing non-payment scenarios.

It establishes requirements for mechanisms such as letters of credit and escrow accounts, outlines the process for reducing supply to defaulters, and permits the sale of surplus power in power exchanges. It also discusses using the Payment Security Administration (PSA) portal for scheduling and the PRAAPTI portal for monitoring billing and payment statuses, with rules on pricing, reporting, and penalties for non-compliance, such as barring defaulters from power exchanges or restricting their trading access.

The new procedure will take effect from January 1, 2025.

Payment Security Mechanism (PSM)

The Payment Security Mechanism (PSM) is critical to ensuring financial security in power transactions. It primarily involves using a Letter of Credit (LC) or an LC backed by an escrow account as per the agreement. Advance payments are also accepted as a valid payment security measure without outstanding dues. When the payment security is adequate, power scheduling for dispatch is initiated. This process requires the appropriate Load Despatch Centre (LDC) to be informed via the Payment Security Administration (PSA) portal on a day-ahead basis.

If a distribution company encounters difficulties establishing an LC, it may provide advance payment equivalent to the desired quantum of power. The generating station can then notify the LDC through the PSA portal to schedule the power, ensuring no outstanding dues. However, if the PSM is not adequately maintained, the generating station must regulate the power supply to the defaulting entity. The defaulting entity remains liable for fixed or capacity charges during such periods. Power supply is restored once the PSM is reestablished, usually within a day of intimation.

In cases of non-payment, the generating company can reduce the supply to the defaulting entity by 75% of the contracted power, with the remaining 25% sold through power exchanges. If the default persists for 30 days, the generating company can sell the contracted power through power exchanges. All actions must be conveyed to the procurer and the LDC, with the regulated quantum recorded on the PSA portal.

Monitoring and reporting obligations require generators, transmission licensees, and distribution licensees to update billing and payment statuses on the PRAAPTI portal. If dues remain unpaid for over two and a half months, the defaulting entities are barred from electricity trading or entering short-term contracts. Access to contracts other than short-term contracts is reduced by 10% per month during extended default periods.

Upon the clearance of dues and applicable surcharges, access is restored. Under exceptional circumstances, the National Load Despatch Centre (NLDC), Regional Load Despatch Centres (RLDCs), or State Load Despatch Centres (SLDCs) may temporarily revise regulations for grid security. Such actions must be justified and documented.

Both generating stations and distribution licensees must adhere to agreed schedules to ensure grid stability. Even during non-scheduling periods caused by defaults, generating stations must provide scheduling information daily in compliance with the Grid Code.

All inter-state and intra-state generating stations, except state-owned facilities, must update the PSM portal of the NLDC daily by 6 AM. This update must include the status of PSM or advance payments for electricity purchases in alignment with timelines specified in the Indian Electricity Grid Code. Transmission and Trading Licensees must inform the NLDC of non-maintenance of PSM, defaults in equated monthly installments (EMIs), or outstanding dues by the defaulting entities. Any request for regulating power supply must be submitted at least seven days before the intended regulation date.

Regulation of Power Supply in Case of Non-Compliance

In situations where the PSM is not maintained, generating companies, transmission licensees, and trading licensees must regulate the power supply to the defaulting entity. This involves ensuring that power is not scheduled for such defaulters, initiating or completing the encashment of the LC as per the Power Purchase Agreement (PPA), or commencing the sale of power to third parties, if permitted under the PPA, to recover dues. To mitigate the impact of non-payment, the affected intra-state or inter-state generator and electricity trading licensee may sell regulated power in the power market.

For interstate generators, RLDCs are tasked with publishing daily lists of defaulting entities within their regions, including details of the corresponding quantum of regulated power, by 6:30 AM. The power scheduling for these entities is then restricted based on information provided via the PSA portal. Similarly, for intrastate generators, SLDCs are responsible for validating contracts entered on the PSA portal within 15 days. If this validation is not completed within the stipulated period, the contracts are assumed to be valid. By 6:30 AM daily, SLDCs receive a list of defaulting entities from the PSA portal and execute non-scheduling instructions as required.

Obligations of Generators

Generating companies must fulfill their contractual obligations to procurers, including distribution licensees or transmission system users, except where power supply regulation is mandated under Section A of the rules or as permitted by the Indian Electricity Grid Code (IEGC). Unauthorized sales of contracted power to other parties without the consent of the original procurer will result in penaltiesGenerating companies may be barred from participating in power exchanges and prohibited from scheduling new short-term contracts for at least three months from the date the LDC confirms the violation. For repeated violations, the penalty duration increases to six months for the second offense and one year for subsequent defaults.

Complaint Resolution The complaint resolution process follows a strict timeline. Complaints received by 5:30 PM on a given day (D) are processed the following day (D+1). Those submitted after this cutoff are treated as received on the next day. Upon receiving the complaint, the RLDC examines the case and forwards queries to the concerned generator, seller, or trader by D+1, with copies shared with the NLDC, procurer, and relevant SLDC or RLDC. The generator or seller must respond by D+2. If no response is received, the complaint is treated as valid. Confirmed violations lead to debarment from power trading and scheduling.

Un-requisitioned surplus power

The updated procedure also addresses the management of un-requisitioned surplus (URS) power. The rules apply to all generating resources, except hydro generating stations, energy storage systems, and renewable generators, governed by “must-run” rules.

Distribution licensees must finalize and communicate daily power requisition schedules to generating companies at least two hours before the Day Ahead Market (DAM) bidding window closes. URS power, including that from shutdown units, must first be offered in the DAM. It should be offered in Real-Time Markets (RTM) and other segments if not cleared. Beneficiary consent is not required to sell surrendered surplus power. However, URS bids must not exceed 120% of the energy charge rate (ECR) determined by the commission or government. Power Energy charges must be provided to Regional Power Committees (RPCs) and SLDCs by the first day of each month, and this data must also be submitted to the National Open Access Registry (NOAR) by the second day. The NLDC and SLDCs compile and share this information with power exchanges by the third day. Power exchanges are required to submit generator-specific reports on pricing and quantum by the fourth day, while RLDCs provide sale data to RPCs by the sixth day.

Unoffered surplus up to the declared capacity is ineligible for fixed cost recovery. This is reflected in the Monthly Non-Offered Plant Availability Factor (NOPAFM), calculated using prescribed formulae. Generators cannot invoice beneficiaries for fixed charges related to this surplus. If technical issues prevent the placement of URS bids, such power is treated as “deemed offered” for fixed charge computation.

Finally, the procedure ensures indemnification for despatch centers (NLDC, RLDCs, SLDCs) and RPCs against liabilities arising from actions taken under these rules. This includes coverage for litigation costs incurred during compliance enforcement by distribution licensees, generating companies, or trading entities.

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