Captive power producers body ICPPA today said the new draft rules for them are against the spirit and provisions of Electricity Act 2003 and deepen the woes of NPA-hit power sector.
ICPPA said Electricity Act 2003 provided that Cross Subsidy Surcharge (CSS) should be abolished over the years. However, the proposed amendments are aimed at creating new avenue of earning CSS from captive users.
"ICPPA welcomes the improvements from the draft of amendments issued in 2016. At the same time, the proposed changes in rules are in contradiction to basic spirit and provisions of Electricity Act-2003 and policies, and also other laws.
"Applicability of these amendments on existing plants will make them sick while power sector is already struggling with NPAs (bad loans)," ICPPA Secretary Rajiv Agrawal told PTI.
The purpose of Group Captive Power Plants was to enable smaller industries without much financial power to get benefit of captive power, just like big industries, but the proposed amendments will stop that, he said.
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In a meeting with ICPPA in 2014, the power ministry agreed that the specific restrictive rule of proportionality needs repealing for making it practical because it forces multiple captive users linked to a CPP (captive power producer) to consume at least 51 per cent of generated power in proportion to its shareholding.
On the contrary, Agrawal said, the proposed amendments make it draconian by imposing proportionality test on 100 per cent of power consumed by captive users even beyond 51 per cent power.
"If any user is forced to draw lesser power share due to genuine reasons like closure of its end-use plant for maintenance then the whole power generated in a year will be treated as non-captive and state discoms will charge CSS on it.
"It means all users of CPP will also have to pay the penalty, and thus the CPP may have to close down," he explained.
This is being done at the behest of state discoms who want that CPPs should close and captive users are forced to buy power from discoms at exorbitant rates. Already discoms employ tactics of restricting open access, he said.
He was of the view that penalising and restricting captive power users and industries is not the solution to the financial mess of state power utilities.
Indian Captive Power Producers Association (ICPPA) is in the process of firming up its feedback and comments on the draft amendments circulated by the power ministry. The ministry has sought comments on the draft till June 6, 2018.
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