The Central Electricity Regulatory Commission (CERC) Has Notified The Draft CERC (Terms And Conditions Of Tariff) Regulations, 2019

Dec 17, 2018
Source Power Weekly Newsletter
Reforms and Regulations

The Central Electricity Regulatory Commission (CERC) has notified the draft CERC (Terms and Conditions of Tariff) Regulations, 2019 for the control period 2019-2024. The CERC has proposed several changes in the draft regulations to align them with the current trends in the power sector. The fixed cost for generators has been proposed to be recovered on a quarterly basis instead of annual and a provision has been made for generators to recover the cost of coal if its gross calorific value at the receiving end does not match with the billed/dispatched one. The norms for working capital have also been tightened with receivables reduced to 45 days from 60 days earlier. The CERC has also proposed the continuation of the 15.5 per cent regulated return on equity for generation and transmission companies. The regulator has allowed a change in the rate of interest on working capital to one-year marginal cost of funds-based lending rate (MCLR) plus 350 basis points (bp), as against the earlier guideline of State Bank of India base rate plus 350 bp. The commission has invited stakeholder comments and suggestions on the draft regulation by January 15, 2019

Central Sector

The Ministry of Power (MoP) has notified the guidelines and standards for the development of electric vehicle charging infrastructure in the country. As per the guidelines, discoms would facilitate the setting up of private charging stations at offices and residences and stations may obtain electricity through open access. Further, setting up public charging stations will be a de-licensed activity enabling any individual to set up public charging stations given they meet technical and performance standards. It also provides for minimum infrastructure requirements of the charging station for light and heavy vehicles. The government plans to roll out the development of EV charging infrastructure in two phases. In the first phase, EV charging stations are to be developed in mega cities with populations of 4 million and above over the next 1 to 3 years. In the second phase, state capitals and union territory headquarters will be covered for distributed and demonstrative effect. Further, important highways connected with each of these mega cities will be taken up for coverage in the next 3 to 5 years.

The Ministry of Power (MoP) has notified the Eco Niwas Samhita 2018, the Energy Conservation Building Code (ECBC) for residential buildings. The phase-1 of the new rules aims to benefit the occupants and the environment by promoting energy efficiency in the design and construction of homes, apartments, and townships. The implementation of the code will have a potential for energy savings of 125 BUs of electricity annually by 2030, equivalent to 100 million tonnes of carbon dioxide emissions. ECBC for commercial buildings was already in place and revised and updated version of ECBC for commercial buildings was launched in June 2017. It is estimated that energy demand in the building sector will rise from around 350 BUs in 2018 to approximately 1,000 BUs by year 2030.

NTPC Limited has issued a tender to develop 20 MW grid-connected floating solar projects at the reservoir of NTPC’s 663.36 MW Auraiya gas-based power plant in Uttar Pradesh. The scope of work includes the supply, design, engineering, manufacturing, installation, and commissioning of the project.

NHPC Limited has floated a tender for the development of a 32 MW solar photovoltaic (PV) project in Jalaun district of Uttar Pradesh, along with 132 kV power evacuation infrastructure. The scope of work includes design, engineering, procurement, manufacturing, quality assurance, testing, insurance, supply, installation, commissioning, and comprehensive operation and maintenance of the project for a ten-year period. The project will be based on engineering procurement and construction (EPC) contract and will be developed on a turnkey basis, with the timeframe of completion as 12 months from the date of issue of letter of award of contract. The bid submission deadline is January 29, 2019.

In its report titled 'Strategy for New India @75', the NITI Aayog has outlined various power sector reforms. These include promotion of smart grids, privatisation of discoms for reduction of aggregate technical and commercial (AT&C) losses, payment of subsidies by direct benefit transfer, and introducing 100 per cent metering for electric supply, among others. It has also suggested that the power purchase agreements (PPAs) including those with state generation companies should be based on competitive bidding. Further, it has pitched for the introduction time-of-day tariff to promote the use of renewable energy and performance-based incentives in the tariff structure.

State Sector

The Delhi Electricity Regulatory Commission (DERC) has issued the draft guidelines under DERC (Net Metering for Renewable Energy) Regulations 2014 for group net metering and virtual net metering, outlining how both the options will work in the city. The draft regulations focus on how more than one consumer can benefit from a single solar plant, either through surplus solar energy for self-consumption or pro-rata credit in the electricity bill by their respective discoms..

Projects and Ventures

KEC International’s transmission and distribution (T&D) business has secured orders worth Rs 12.57 billion across India, SAARC, East Asia Pacific, Middle East, and the Americas. The T&D business has received orders from Power Grid Corporation of India Limited for diversion works of various transmission lines, from West Bengal State Electricity Transmission Company Limited (WBSETCL) for the supply and laying of 220 kV lines, a 220 KV transmission line project in Nepal, a 500 kV transmission line project in Thailand (500 kV), and a gas insulated switchgear (GIS) substation project (132 kV) from Dubai.

GE Renewable Energy has won a contract from ReNew Power for supply and installation of wind turbines for the 300 MW Gadhsisa wind farm in Gujarat. This is the largest turnkey EPC contract bagged by GE Renewable Energy in India. GE will service, operate and maintain the facility, which is due to be commissioned progressively by end of 2019, for a period of ten years. With this, GE now has 1.8 GW onshore capacity in India.

Power Mech Projects has won two orders worth Rs 2.45 billion in the domestic market. The first one is for the structural and architectural works of unit-1 of the 1,600 MW Uppur supercritical thermal power project in Ramanathapuram District in Tamil Nadu for a total contract value of Rs 1.36 billion. Meanwhile, another order secured pertains to the operation and maintenance contract for the 1,600 MW coal-based Yeramarus thermal power station for a period of 30 months on a pilot basis at Chikkasugur, Raichur District, Karnataka for a contract value of Rs 1.09 billion.

Debt & Equity

NTPC Limited has completed the acquisition of the 720 MW Barauni thermal power plant in Begusarai district in Bihar from Bihar State Power Generation Company Limited (BSPGCL). The station has two units of 110 MW capacity each which are currently under renovation and modernisation while two other units of 250 MW each are under construction. The transfer has been completed in accordance with the Bihar Power Generation Undertakings Transfer Scheme 2018 notified by the state government on June 27, 2018, and the amendment dated December 14, 2018.

Japanese conglomerate Hitachi Limited has agreed to acquire 80.1 per cent stake in ABB’s power grid division at an enterprise value including net debt of $11 billion for about $6.4 billion. ABB will keep the remaining 19.9 per cent stake, while it plans to return proceeds worth $7.8 billion to investors through a buyback or other measures. Further, about $500 million will be made in non-operating restructuring charges in the next two years. The power grid segment accounted for 40 per cent of ABB India's revenues for the ninemonth period ended September 2018 versus 26 per cent for the parent's, while industrial and digital solutions accounted for the rest.

Rays Power Infra Private Limited has closed its first round of Rs 2 billion mezzanine funding from DMI Finance Private Limited. With this investment, Rays plans to grow its co-development business model which is primarily a develop-and-sell model where the company develops the asset and pre-commissions its sale to generate higher returns and efficiently utilise the capital invested. Rays is aggressively pursuing opportunities in distributed generation, rooftop solar assets and entering the retail sector with e-mobility solar solutions targeting retail consumers. The current funding will be a boost to these business initiatives.