West Bengal Reduces Late Payment Surcharge to 1% Per Month Amid COVID-19 Lockdown

The Commission has directed generating companies not to use coercive methods to recover dues

April 21, 2020


Considering the ongoing economic disruption caused amid the Coronavirus pandemic, the West Bengal Electricity Regulatory Commission (WBERC) has issued an order for the late payment surcharge (LPS) to be charged by the generating companies and transmission licensees.

The Commission noted that if any delayed payment (beyond 60 days) by the distribution companies (DISCOMs) to the generating companies falls between March 24, 2020, and June 30, 2020, the DISCOMs should make the payment with a reduced rate of late payment surcharge at 1% per month.

Recently, given the ongoing lockdown caused to arrest the COVID-19 pandemic, the Central Electricity of Regulatory Commission (CERC) reduced the rate for LPS payable by DISCOMs power generators. The LPS has now been reduced to 12% per annum from the earlier 18% if the due date falls between March 24, 2020, and June 30, 2020. The CERC stated that if there’s any delay in the payment to the generating companies and inter-state transmission licensees beyond 45 days from the date of presentation of the bills (between March 24, 2020, and June 30, 2020), then the DISCOMs can make the payment of LPS at a reduced rate of 1% per month instead of 1.5%.

Following CERC’s announcement of the reduction in the LPS were also announced by Punjab, Madhya Pradesh, Goa, and Union Territories.

The Commission further noted that if the period of 60 days falls before March 24, 2020, or after June 30, 2020, the DISCOM should be liable to pay the surcharge as per the tariff regulations.

The Commission said that the relief could be claimed under force majeure provisions of the power purchase agreements (PPAs). It also clarified that the beneficiaries of the generating stations would continue to avail rebates as per the tariff regulations if the payments are made within the timeline specified in the said regulations.

Similarly, the Commission stated that for intrastate transmission licensees, the late payment surcharge would be governed following the provisions of the transmission service agreements (TSAs).

WBERC also noted that the state generating companies should not use coercive means for recovering dues.  They should continue the supply of electricity as it has been recognized as an essential service by the government of West Bengal as well as the government of India.

The economic impact of the COVID-19 pandemic is being felt by industries across the board, and the renewable sector is also feeling the heat. You can find all the steps taken by the government and the impact of the pandemic on the industry here.