Punjab Mulls Reducing Renewable Purchase Obligations Amid COVID-19 Crisis

The state government also asked for the exemption of fixed charges for medium and large supply consumers for two months


The Punjab State Electricity Commission (PSERC) has invited comments, objections, and suggestions for a proposal by the state government to lower the renewable purchase obligations (RPOs) of power establishments for the year to alleviate the financial burden on distribution companies (DISCOMs) and consumers due to the ongoing COVID-19 crisis.

The Punjab government, on April 7, 2020, had written a letter to the state commission asking it to reduce RPOs by 1.5% and 2% for the years 2019-20 and 2020-21, respectively, to help the power sector operate smoothly in these difficult times.

Punjab - Proposed Renewable Purchase Obligation (RPO)

In its response, the Punjab State Power Corporation Limited (PSPCL) shed some light on the shortages caused by delays arising due to the COVID-19 pandemic and said that these delays would continue.

The PSPCL listed out some delayed projects which included 30 MW of solar rooftops projects commissioned in August 2019, 300 MW of large-scale solar, and 200 MW of wind power projects assigned by the National Thermal Power Corporation (NTPC) in March 2019. It also added that the delayed commissioning of 40 MW of cogeneration projects would only be done in the financial year (FY) 2021-22. There are nearly 110 MW of solar projects which are under litigation due to the pandemic, it further added. It also noted that the commissioning of 26 MW of a 150 MW wind project has not been completed and may get extended further.

The DISCOM said that because of these issues, the shortfalls of solar and non-solar RPOs were by 140.71 million units (MU) and 495.67 MU, respectively, for the FY 2019-20. The renewable energy certificates (RECs) for these shortfalls would cost ₹1 billion (~$13.15 million), it added.

The tentative shortfall in FY 2020-21 is expected to be around 899.26 MUs and would lead to ₹2.2 billion (~$28.93 million) in corresponding REC expenditure. Overall, reducing RPOs for these two years would lead to savings of ₹3.2 billion (~$42.08 million).

The DISCOM noted that unless RPO targets are reduced, the financial burden on PSPCL’s consumers will increase.

The state government had also asked the Commission for the exemption of fixed charges for medium supply (MS) and large supply (LS) industrial consumers for two months, starting March 23, 2020, and for energy charges to be fixed only to the extent of the amount reduced by waiving fixed charges (single rate).

The proposal implies that MS and LS consumers would only be billed based on the actual meter reading (AMR). Adding to this proposal, the PSPCL said that after two months of exemptions, fixed charges for the period could be recovered from medium and large supply consumers through arrears paid over ten months. The DISCOM noted that the financial relief consumers would receive on account of the exemptions would amount to ₹2.47 billion (~$32.48 million).

Recently, the PSPCL introduced an innovative plan calling on all its consumers to make payment in advance towards their estimated electricity bills up to March 2021. The customers can pay to the extent they can through digital modes and earn interest @1% per month on the advance payment. The DISCOM has stated that it has received an advance payment of ₹350 million ($4.61 million) in less than a week.

Previously, Mercom reported that due to the ongoing lockdown as a result of the Coronavirus (COVID-19) outbreak, the Punjab State Electricity Regulatory Commission has provisionally reduced the rate of late payment surcharge to 6% per annum if the due date falls between March 24, 2020, and June 30, 2020.

Earlier, the PSPCL allowed Prayatna Developers Private Limited, a solar power special purpose vehicle of Adani Power Limited, to inject solar power into the grid with immediate effect. The PSPCL had issued a force majeure notice several days ago, stating that it has been forced to curtail power purchase and generation due to the ongoing nationwide lockdown.