Bihar Commission Allows DISCOMs to Carry RPO Shortfall to Next Year
The permission was granted considering the reduced market activity amid the ongoing coronavirus crisis
The Bihar Electricity Regulatory Commission (BERC) has approved the request of the Bihar State Power Holding Company Limited (BSPHCL) to carry forward the shortfall in its renewable purchase obligation (RPO) for the financial year (FY) 2019-20 to FY 2020-21.
The Commission further added that the power company could purchase either solar power or solar renewable energy certificates (RECs) to fulfill the RPO shortfall for FY 2019-20.
Earlier, BSPHCL had filed a petition on behalf of North Bihar Power Distribution Company Limited (NBPDCL) and South Bihar Power Distribution Company Limited (SBPDCL) for seeking an exemption of the REC shortfall in achieving the RPO target for FY 2020. It had also requested for exemption of the shortfall in RPO target until the first quarter of FY 2020-21 due to the outbreak of the COVID-19 pandemic.
BSPHCL then filed a revised petition addressing the shortcomings in the earlier petition and asked for the approval to carry forward the balance REC shortage in the achievement of its RPO for the FY 2020 to FY 2021.
The petition noted that Bihar is dependent on the central government’s programs to fulfill its RPO targets. Bihar is one of the least developed states for solar, with only 111 MW of solar projects currently in operation, according to Mercom India’s Solar Project Tracker.
It stated that although the distribution companies have tied up for solar and wind power with the Solar Energy Corporation of India (SECI) and NTPC, the renewable power from such sources will be made available to Bihar from FY 2021 onwards.
Recently, the state adopted tariffs of ₹2.60 (~$0.035)/kWh and ₹2.44 (~$0.03)/kWh to procure 300 MW and 150 MW of solar power from NTPC and SECI. The state has also called for bids to set up 250 MW of solar projects.
The Commission noted that the RPO target for the FY 2020 was 11.5%, which included 4.75% of solar RPO and 6.75% of non-solar RPO. Similarly, for FY 2021, the RPO target has been set at 14.25%, which includes 6.75% of solar RPO and 7.5% of non-solar RPO. For the financial year 2022, the RPO target is 17%, which includes 8% of solar RPO and 9% of non-solar RPO.
The Commission underlined that proper planning is required on the part of the DISCOMs to purchase the required RECs when the market conditions are more favorable to them.
BSPHCL, in its submission, had stated that the REC trading session in March 2020 suffered due to the sudden outbreak of COVID-19 in the country and the subsequent lockdown.
Mercom reported previously that March witnessed a significant drop in the trading volume of solar as well as non-solar renewable energy certificates. The non-solar clearing price came spiraling down to the floor price of ₹1,000 (~$13.25) on both the exchanges. Even though this is the end of the financial year 2019-20, the market didn’t see any demand that could fuel the market sentiment.
The petition added that the cash collection of both DISCOMs suffered a severe dip due to the closure of cash collection counters. It was not possible to arrange the required fund for the purchase of solar REC in March 2020 due to this liquidity crunch.
The Commission said that it was satisfied with the efforts made by the DISCOMs to fulfill the RPO requirements. The Commission also noted the difficulties faced by the DISCOMs in non-participation in the trading session in March due to country-wide lockdown. Taking all these factors into account, the Commission approved the request of BSPHCL to carry forward the shortfall in RPO for the FY 2020 into FY 2021.
Recently, BERC reduced the rate of late payment surcharges payable by the DISCOMs and transmission licensees to ease their burden during the ongoing coronavirus crisis. The Commission specified a reduced LPS rate of 0.75% per month, down from 1.25% previously, for payments delayed by DISCOMs to interstate transmission licensees and the BSPHCL beyond the permitted 60-day grace period.