Karnataka Wind Installer and DISCOM Spar Over Wheeling of Energy to Open Access Consumers

The Commission ordered BESCOM and GESCOM to redo the energy bills from June 2018 to March 2019

June 4, 2020

/ Wind

The Karnataka Electricity Regulatory Commission (KERC) has ordered that Golden Hatcheries, a company that had installed a 3.2 MW wind power project, should be granted its due credits for the energy injected into the grid from June 12, 2018, to July 6, 2018.

In this case, there were four respondents, Karnataka’s State Load Despatch Center, Karnataka Power Transmission Corporation Limited (KPTCL), Bangalore Electricity Supply Company Limited, and Gulbarga Electricity Supply Company Limited. The Commission has asked the respondents BESCOM and GESCOM to redo the energy bills from June 2018 to March 2019.

Background of the Case

In 2017, the government of Karnataka approved the proposal of Golden Hatcheries for the installation of a wind power project of 3.2 MW (4×0.8 MW) capacity in the Ballari district in the state.

Golden Hatcheries commissioned the project on March 31, 2018. The company wanted to wheel the power generated from the project for sale to third parties through KPTCL, GESCOM, and BESCOM.

In February 2018, Golden Hatcheries applied for open access and wheeling and banking (WBA) agreement before the SLDC to wheel the energy to the consumer, namely, Valdel Extent Outsourcing Private Limited. However, the KERC noted that though the application mentioned the name of open access consumer as Valdel Extent Outsourcing Pvt Ltd, the official memoranda also had the names of other consumers. The Commission noted that the petitioner had changed the open access consumers from time to time.

Here, the open access application relates to long-term open access. So, in line with the regulation, if the licensee fails to convey its approval within 15 working days, the access will be considered as granted.

Though the petitioner had applied to long-term open access on February 14, 2018, it had not enclosed the evacuation approval with the application. The complete application was forwarded to the SLDC on March 15, 2018. The SLDC gave its approval for open access in June 2018 and requested Golden Hatcheries to submit a draft wheeling and banking agreement to GESCOM. In its petition, Golden Hatcheries did not claim that it had submitted the required number of agreements to each of the licensees concerned within the stipulated time.

Further, GESCOM asked the petitioner to furnish an undertaking that the petitioner will not claim any charges for the energy generated from the date of commissioning to the date of the execution of the wheeling and banking agreement. GESCOM also instructed the petitioner that unless the undertaking is given, the agreement will not be signed.

Later, GESCOM issued a letter closing the balance of energy at the end of January 2019 as 12,487 units, and for the excess drawn energy, it levied a penalty of ₹182,023 (~$2,420).

Then in May 2019, GESCOM wrote another letter reiterating its demand for ₹9.3 million (~$123,871) and SLDC charges of ₹20,012 (~$266). The petition challenged this levy of charges before the KERC.

The petitioner claimed that the energy injected into the grid from the date of commissioning of the project has to be acknowledged and that if all the energy injected is credited, there would be no excess drawl by its open access consumers. It further contended that the levy of twice the amount of tariff by GESCOM was, therefore, improper.

On the other hand, the respondents argued that the unscheduled and unauthorized injection and drawl of power under a wheeling arrangement leads to instability of the grid and wastage of energy and should be compensated for by the petitioner as per the power purchase agreement (PPA).

Going back to an earlier order on a similar subject, the Commission explained a few important points.

  • If the net energy injected by the generator is more than the total energy consumed by the open access consumer, the entire consumption of the consumer should be treated as ‘wheeled energy.’
  • The balance energy after wheeling will be treated as banked energy.
  • If the net energy injected by the generator and the banked energy is less than the total consumption of energy of the open access consumer, the excess energy consumed is to be billed as per the tariff applicable.
  • The unutilized banked energy at the end of the year should be credited to the account of the injection point at the time of energy balancing.
  • The required entries should be made at the time of the energy balancing to reflect the net quantity of energy injected and wheeled.

Underlining this, the Commission said that the bills issued to the petitioner and the open access consumers have to be redone in accordance with the previous directions. The order also states that the calculation of the amount of energy injected into the grid by the developer from June 12, 2018, to June 30, 2018, should be on a pro-rata basis, considering the net energy injected into the grid.

Last year, the KERC ruled against providing any relief to Amplus Power Solutions, the developer of a 34.3 MW solar power project in a solar park in a case regarding the payment for energy supplied before a wheeling and banking agreement was in place.

Also, in March 2019, the Karnataka High Court issued a significant ruling in which it quashed an order issued by the KERC relating to an increase in wheeling charges for open access power consumers in the state. The Karnataka High Court order brought relief to all renewable energy generators trading power through open access in Karnataka. The court, in its order, reiterated the principle of settled contracts, which lent certainty to power purchase agreements and instilled confidence in investors.