Ministry of Power Suggests Changes to CERC Regulations Regarding Transmission Charges

The ministry said that there was a need for the sharing regulations to be amended


The Ministry of Power has issued directions to the Central Electricity Regulatory Commission (CERC) regarding sharing transmission charges under ‘force majeure’ conditions.

The ministry noted that the Central Transmission Utility (CTU) gets the interstate transmission system (ISTS) developed by the transmission licensees either through the regulated tariff mechanism in which the tariff is determined by CERC or the competitive bidding process, in which the central commission adopts the tariff.

According to the sharing regulations 2020, for an ISTS licensee whose transmission system is delayed, the CTU pays transmission charges to the licensee of an inter-connected transmission element or the generation company whose deemed commercial operation date (COD) has been declared.

Similarly, clause 13 (8) of the existing regulations requires payment of transmission charges by a  licensee to a generating company in case of delay in commissioning the transmission system. The charges are to be paid for the period from the COD of the generating station to the COD of the transmission system.

Conversely, in the case of any delay of COD by a generating station, the generating company must pay the transmission charges for the period from the COD of the transmission system to the COD of the generating station.

There is no direct relationship between the defaulting party and the aggrieved in all these cases. The ministry noted that it was not proper that a third entity is required to compensate either party.

The ministry said that clause 13 of the sharing regulations exempted transmission charges for power generated from solar and wind power for 25 years from generating stations whose capacity is declared under commercial operation on or before December 31, 2022. The ministry later extended the date till June 30, 2023.

Moreover, there may be a delay in the COD of a solar or wind power generating station due to an event of ‘force majeure’ or due to a delay in commissioning of the transmission system. The sharing regulations, therefore, need to be amended to provide for these eventualities.

In most cases, a power producer or procurer will be connecting to the existing network without upgrading the network. In such a case, the only cost to be incurred is that of connecting to the network. This cost must be met by the entity connecting to the system, whether it is a producer of power or the distribution company (DISCOM). In such a case, if the producer does not begin to inject power into the system on the scheduled date or the DISCOM does not begin drawing the power on the scheduled date, it is not causing any loss to the system. However, the delays on both sides should attract penalties, so that grid discipline is maintained.

The ministry said that where the addition of a generating unit or the increase in consumption by a DISCOM entails the strengthening of the transmission system, then the strengthening will not be only for one generator or DISCOM but will provide for a larger capacity addition to be used by many generators or consumers down the line. The entire burden of strengthening, which will serve many producers or procurers in the future, cannot be levied on one producer or procurer.

Further, the ministry proposed that where a transmission entity completes the construction of the line but the upstream (generation or other transmission segments) or downstream (distribution or downstream segment of transmission) is not ready, a similar penalty will need to be levied on the transmission entity if it fails to adhere to the timeline.

The ministry issued directions to the CERC to amend the transmission charges sharing regulations to provide for the following:

  • The transmission charges of an ISTS element will be included to determine transmission charges of designated ISTS customers
  • No additional penalties through sharing regulations will be levied for the COD delay of an element of ISTS. Delay automatically causes losses to the transmission licensees. The penalties recovered from the ISTS licensees for the delay in commissioning will be shared with the designated ISTS customers.
  • Penalties for the delay in COD of generating stations, or for the delay in completing the transmission system, or operationalizing the LTA will invite penalties to be paid to CTU.
  • Suppose a renewable energy generation capacity eligible for ISTS waiver is granted an extension in COD by the competent authority. In that case, the commencement and the LTA period will also get extended accordingly.
  • Events of force majeure should be defined, and the provision included enabling the CTU to extend the COD of a generating station and the LTA start date.

In May last year, CERC issued new guidelines for ISTS charges and losses. The guidelines shed light on the nodal agencies’ responsibilities and calculating ISTS charges and losses for solar and wind projects.

In March 2020, the Ministry of New and Renewable Energy (MNRE) had issued a memorandum to address the time gap between the commissioning of the transmission system and renewable energy generating projects. The MNRE had emphasized that if the transmission system has been delayed and the renewable projects are already commissioned before time, then the cost of the power generation should be socialized.

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