Discoms can choose to discard plants, govt clarifies

by Jeremy

BSES had said that it has to pay fixed charges of about Rs 35 crore per month to the Dadri-1 plant, even if it does not source electricity from the unit. Removing the ambiguity regarding the rights of electricity distribution companies (discoms) while exiting power purchase agreements (PPAs) with old thermal generating stations, the Union power ministry has clarified that discoms have the freedom to choose the specific plants from which they want to stop sourcing power.

power distributionpay fixed charges of about Rs 35 crore per month to the Dadri-1 plant, even if it does not source electricity from the unit.” data-lazy-type=”image” />

The clarification makes it easier for Delhi’s discom BSES to de-allocate its share of electricity from NTPC’s Dadri-I unit. It sends assuring signals to other discoms in the country, hoping to exit costly PPAs with the state-run producer.

The ministry said that several organizations had sought clarity on one of the clauses in the government’s PPA-exit guidelines issued in March, which stated that “in case of bulk power supply agreements, the state/discom may relinquish entirely allocated power from such projects which have completed 25 years since commissioning of the project”.

As recently reported by FE, some sector experts interpreted the clause to stipulate that in the case of composite PPAs with multiple power plants, discoms cannot selectively exit the contract for a specific generating station, and they will have to revoke procurement en masse from all units of more than 25 years.

The Central Electricity Regulatory Commission (CERC) has recently allowed Reliance Infrastructure-led BSES to approach the Union power ministry for relinquishing electricity supply contract from Dadri-I power plant, as the right to allocate or de-allocate electricity from CPSE units lies with the central government.

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