CERC allows BSES discoms to exit PPAs with NTPC Dadri power plant

Power regulator Central Electricity Regulatory Authority has allowed Reliance Infrastructure firms BSES Yamuna Power and BSES Rajdhani Power to exit power purchase agreements with NTPC Dadri-I power plant, which completed 25 years of service on November 30 last year.

The CERC order issued on July 1, 2021, is in sync with the efforts of the BSES power distribution firms (discoms) operating in Delhi to optimize their power purchase costs, including exit from the costly power plants, as also to meet their renewable power purchase obligations (RPO) as mandated by the Delhi Electricity Regulatory Commission.

Under the RPO, the discoms are required to purchase a certain proportion of electricity from renewable sources as mandated by the power regulators. They can also buy renewable energy certificates to meet the RPO.

"Petitioner may exit from the PPA/SPPA (SPPA means supplementary power purchase agreement) by approaching the Ministry of Power for de-allocating its share from Dadri-I generating station; and that as Dadri-I generating station has already completed 25 years on November 30, 2020, from its COD, the provisions of Regulation 17(2) related to first right of refusal would become effective once the Ministry of Power de-allocates share of the Petitioners from Dadri-I generating station," the order said.

Under Regulation 17 (2), the discoms have the first right to refuse the purchase of electricity from a power plant against their allocation.

The power regulator noted that the government guidelines also permit the willing distribution companies to relinquish their allocation after 25 years from COD (commercial date operation) and the DERC has already written to the power ministry for de-allocation of share of distribution companies of Delhi.

For relinquishment of their allocations, the petitioners (BSE discoms) may approach the Ministry of Power, the CERC stated in its order.

Provisions of Regulation 17(2) (of CERC Tariff Regulations, 2019) related to first right of refusal would become effective once the power ministry de-allocates the shares of the petitioners (BSES discoms) from Dadri-I generating station, the CERT said.

The allocated share of power from Dadri-I to BSES Yamuna Power and BSES Rajdhani Power was 62 MW and 560 MW respectively.

BSES Discoms had stopped scheduling power from Dadri -I plant of NTPC, in November 2020 i.e., upon completion of the plant 25 years from its commercial date of operation and had sought an exit from the Dadri-I plant.

NTPC had denied exit to BSES Discoms, following which, the two utilities had approached the CERC on this issue.

"In a landmark judgement, the CERC has ruled that Discoms have the right to terminate the Power Purchase Agreement after 25 years.

“This will bring down the power purchase cost of the Discoms and help in lowering the power tariff, thus benefiting the 45 lakh consumers of BSES in Delhi," a BSES spokesperson said.