Andhra Pradesh Issues Short-Term Power Procurement Regulations

The regulations will apply to the DISCOMs of the state

February 14, 2022


The Andhra Pradesh Electricity Regulatory Commission (APERC), in order to simplify the short-term power procurement process, has issued the ‘Terms and Conditions for Short-term Procurement and Sale of Power, Regulations, 2022.’

The regulations will apply to the state’s three distribution companies (DISCOMs). As per the new regulations, the monthly estimation of the power demand in each time block of 15 minutes will be carried out by the state load dispatch center (SLDC) based on the past data and demand forecasts by the distribution companies (DISCOMs). The day-ahead and weekly demand estimations will also take into consideration weather forecasts in addition to the above data.


The Commission, in its statement of reasons for the regulations, said that the share of renewable energy contracted by the DISCOMs, in terms of the installed capacity, was about 50% of the total power portfolio. Wind and solar power projects made up for a significant part of the installed capacity. Integration of the intermittent and unpredictable nature of such disproportionate renewable energy into the grid was a big challenge for the licensees. There is a constant need to procure high-cost energy from the market on a short-term basis to meet the gap between supply and demand.

The Commission added that the short-term power procurement by the DISCOMs has been on the rise in recent years, as can be seen from the share of short-term power procurement in the overall power purchases. The short-term power procurement, which was around 10% in FY 2019 and FY 2020, rose to 20% during FY 2021.  So, it was essential to regulate the short-term power procurement and streamline the process.

The commission also placed a public notice on its website on November 24, 2021, seeking suggestions and objections from all stakeholders.

New Regulations

Monthly power procurement

By the 10th of every month, the state DISCOMs should submit to SLDC their demand estimate for each 15-minute time block for the following month. After assessing the overall demand, SLDC will communicate to the DISCOMs the power to be procured by each of them on a short-term basis for the following month within three days of receiving the demand estimations.

After receiving the communication from SLDC, the DISCOMs will float tenders to procure power on a short-term basis. After examining the details of the tenders provided by the DISCOMs, SLDC will communicate its decision whether to continue with the procurement of power or not.

Weekly power procurement

By Wednesday of every week, SLDC will estimate the total power demand from all approved sources, including power procurement on a short-term basis. Then, after considering the transmission constraints, generation, and transmission capacities to be added in the next week will communicate to the DISCOMs the power requirement for the following week.

Day-ahead procurement 

Every day by 10 am, the SLDC will estimate the state’s power demand and availability from all approved sources, including the availability of power on a short-term basis. The DISCOMs may procure power from the day-ahead market (DAM), and it has to be ratified by the Commission fortnightly.

Intraday purchases

The DISCOMs and SLDC should have modern software tools to estimate the demand eight to ten time blocks ahead. If there is a demand-supply gap during intraday, the DISCOMs can meet the requirement by procuring power from the intraday market. The Commission should ratify all such intraday purchases.

Bilateral purchases

Under no circumstances, the DISCOMs should purchase power through bilateral contracts except from the sources approved by the Commission. The banking of energy is permitted bilaterally with prior approval from the Commission until the Ministry of Power issues guidelines and the DISCOMs can follow suit.

Ratification of short-term power procurement by the Commission

The short-term procurement of power should not result in the backing down of power from thermal power plants approved in the retail supply tariff order for that year. However, backing down of thermal power is permitted if the per-unit landed cost of short-term power at the state periphery is less than the approved thermal stations in the merit order or a threat to grid security.

Reserve shutdown

Under no circumstances should the generators be kept under forced shutdown on the pretext of saving power purchase costs until such shutdowns actually save overall power purchase costs. All such reserve shutdowns should be placed before the Commission within 48 hours until the Commission finalizes guidelines on such reserve shutdowns and comes up with guidelines for revival from such shutdowns.

Sale of surplus power

The DISCOMS should take all the necessary steps to sell the surplus power through exchanges, competitive bidding process, or banking or forward contracts, provided such sales do not increase the power purchase costs.

Constitution of a dedicated cell

All the three DISCOMs of the state will constitute a round-the-clock dedicated cell, which would have at least one officer of the rank of general manager from each DISCOM. The DISCOMs should formulate appropriate guidelines for the modus operandi of the dedicated cell.

Computation of landed price for short-term power procurement

While computing the per-unit landed price, the DISCOMs should add per-unit transmission cost, scheduling cost, energy losses converted into cash, transmission deviation charges plus ₹0.25 (~$0.033)/kWh to the per-unit power procurement prices in the power exchanges.

Real-time data

The SLDC would make real-time data regarding demand and generation available from all sources to the monitoring cell and the Commission.

Last April, the Ministry of Power decided to set up an integrated DAM at the power exchanges with separate price formation for power generated from renewable energy and conventional power. Long-term PPAs have been replaced by the medium-term, short-term, day ahead, intraday, and real-time markets, where the day is divided into 96-time-blocks of 15-minutes each.

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