Govt may invoke emergency powers to let power producers step out of PPAs – EQ Mag Pro
New Delhi: The authorities might invoke its emergency powers to make 40 GW home coal-based crops proceed to generate power after they begin mixing imported coal despite the fact that their power purchase agreements (PPA) don’t permit greater gasoline prices to be handed on to the client.
The authorities would permit these crops to promote electrical energy on the power exchanges if the states they’ve PPAs with don’t purchase costlier electrical energy generated by them, folks conscious of the deliberations informed ET.
In April, the union power ministry had requested all power plants utilizing home coal to import 10% of their gasoline requirement and mix it with native coal.
The costlier imported coal would increase the associated fee of electrical energy era that underneath present agreements can’t be handed on to the client.
The proposed mandate will guarantee these tasks function and promote to distribution firms underneath their present contracts or promote on power exchanges if power retailers refuse offtake due to greater prices, they mentioned.
The power ministry is engaged on a technique to pass-through the upper value of mixing imported coal to the shoppers. The directive to these crops could possibly be issued within the subsequent 2-3 days.
Section 11 of the Electricity Act supplies that the federal government may, in extraordinary circumstances, ask a producing firm to function and preserve any station in accordance with its instructions.
“The Centre considers PPAs as legally binding documents, but in the wake of the emerging national crisis, Section 11 has to be used to prevent mass blackouts and (deflect a) threat to the national grid,” a senior authorities official mentioned.
However, authorized consultants aren’t satisfied in regards to the Centre’s jurisdiction within the case of power tasks promoting to just one state. Such tasks fall underneath the purview of states and their respective electrical energy regulatory commissions.
Tariffs for these 40-gw coal-based crops throughout the nation had been derived via tariff primarily based on home coal via aggressive bidding underneath part 63 of the Electricity Act.
Power tasks of central PSUs and crops with multi-state PPAs fall underneath the Centre’s area and are overseen by the Central Electricity Regulatory Commission (CERC).
The Centre is counting on coal imports to construct shares at power stations amid excessive demand projections.
Last Wednesday, the Centre invoked an emergency provision to direct CERC to permit power crops to use coal blended with up to 30% imported content material till March subsequent yr with out having to search the consent of purchaser states.
The directive mentioned shares at producing stations are depleting at a worrisome charge due to the mismatch in demand and provide of home coal.
On May 5, the power ministry invoked Section 11 to mandate 13 imported coal-based power tasks to function and promote to discoms or on the power exchanges. A panel appointed by the order additionally selected benchmark tariffs for six of these tasks.