Issue 01 Volume 04 July, 2021

REGULATORY
INSIGHTS
Regulatory Editorial
Outlook The Indian power sector has witnessed significant development in rural
electricity access, growth of renewables as well as development of various
MoP: National Electricity Policy, 2021 market segments, since the enactment of the Electricity Act 2003. The
[Draft].......................................................... 2
experience with developing and implementing regulatory framework,
MoP: Redesigning the Renewable Energy particularly those related to multi-year ARR and tariff framework, enables to
Certificate (REC) Mechanism [Discussion explore the evolutionary process for the regulatory philosophy sector.
Paper]........................................................... 7 Furthermore, the objective to enhance competition across the electricity supply
chain necessitates a change in the National Electricity Policy that was last
MoP: Electricity (Rights of Consumers)
(Amendment) Rules, 2021 [Draft].............. 10 spelled-out in 2005.
CER's analysis of the draft National Electricity Policy 2021 identifies a number
HPERC (Security Deposit) (Fourth
Amendment) Regulations, 2021 [Draft]...... 11 of issues for consideration and provides suggestions for addressing the same.
Some of the key inputs of CER include - emphasis on governance reform for
Proposed Amendments in JERC for the State the government-owned distribution utilities, enhancing the scope from RE
of Goa & UTs (Electricity Supply Code) development to clean energy transition for the sector, adoption of light-handed
Regulations, 2018 [Draft]............................ 12
regulation with a gradual shift towards Performance-Based
Proposed OERC (Procurement of Energy from Regulation/Incentive Regulation, addressing curtailment particularly through
Renewable Sources and its Compliance) introduction of market-based hedging instruments for RE, adoption of single
Regulations, 2021 [Draft]............................ 15 RPO basket, separation of SLDC from STU, creation of Distribution System
Operator (DSO), flexibility and market for ancillary services, a mechanism for
evaluating the implementation of smart meters including prepaid meters, data
access and transparency, and need for capacity building in the sector.
ERC Tracker Renewable Energy Certificates (RECs) retain their relevance even with the
emergence of a variety of options for sale of renewable energy in the country.
Regulatory Updates ................................... 16
CER is of the opinion that the role of RECs should be extended to use it under a
Tariff Orders .............................................. 20 unified framework for 'Guarantee of Origin' for all the renewable energy
generated in the country. Adoption of technology-specific REC multipliers and
Regulations ................................................ 20 integrating the ESCerts market under the PAT mechanism would significantly
enhance the liquidity and competition in the REC market. Furthermore, the
Free Registration at cer.iitk.ac.in introduction of RECs-based derivatives and its secondary trading would also
enhance interest in this market segment.
The draft Electricity (Rights of Consumers) (Amendment) Rules, 2021 aims to
empower the consumers, particularly those with behind the meter RE
generating resources. To encourage demand-side management and effective
utilisation of behind the meter RE generation/storage resources, it is suggested
Access online that time of day tariff be implemented for all consumers above 5 kW load of
sanctioned load. Investment in feeder separation for more effective integration
of solarised agriculture pump-sets evaluated on the basis of the overall
economic benefits would bring further distribution to the utility as well as the
consumers.
cer.iitk.ac.in/newsletter Anoop Singh
Founder & Coordinator, Centre for Energy Regulation
The Centre is hosted in the Department of Industrial and Management Engineering, IIT Kanpur
and is seed funded by Government of United Kingdom through a project titled ‘Supporting
Structural Reforms in the Indian Power Sector’ under Power Sector Reforms (PSR) programme.

Centre for Energy Regulation (CER), Department of Industrial and Management Engineering,
Indian Institute of Technology Kanpur, Kanpur – 208016 (India)
Stay Home. Stay Safe. © CER, IIT Kanpur
 Regulatory Outlook
MoP: National Electricity Policy, 2021 [Draft]
th
The Ministry of Power notified the draft National Electricity Policy (NEP), 2021on 27 April, 2021. The aims of the policy
are:
❖ Promotion of clean and sustainable generation of electricity
❖ Development of an adequate and efficient transmission system
❖ Revitalization of DISCOMs
❖ Development of efficient markets for electricity
❖ Supply of reliable and quality power of specified standards in an efficient manner
❖ To move towards light-touch regulation

CER Opinion
National Electricity Policy and Plan: The Central Government shall, from time to time, prepare the NEP and
tariff policy, in consultation with the State Governments and the authority for the development of the power
system based on optimal utilisation of resources such as coal, natural gas, nuclear substances or materials, hydro
and Renewable Sources of Energy (RES). (Section 3)
Financial Turnaround of DISCOMs and DISCOM Level Governance Reform: The historical experience
with various central sector schemes has demonstrated limited and short-lived impact of such reform-linked
programs that often have limited inputs from the entities (distribution licensees) who are to implement the same. A
'single-design-fit-all' approach needs to be replaced with a menu of alternate set of reform-linked programs that
allow the target entities to pick the one most suitable (and hence, automatically revealing their preferences, thus
providing further inputs for policy design). Further, the program design process should include broad-based
consultation with stakeholders including think tanks. Till today, power sector reform has focused on sector-level
governance and has not been able to significantly influence the utility-level governance structure, which continues
to hinder the turnaround of the sector.
Visibility of Performance of 'non-licensees' (Franchisees etc.) in the Distribution: While Section 13 of the
Electricity Act, 2003 exempts license requirement for “local authority, panchayat institution, users' association,
co-operative societies, non-governmental organisations, or franchisees”, this is construed to mean an absence of
visibility of their performance. In order to evaluate the success of such alternate models, there is a need for greater
access to information about their performance. While this may not entail direct regulatory purview, this would
serve as an effective performance benchmark for the regulated licensees, and also provide guidance to the
licensees in the selection of franchisees. NEP should propose a broad framework for data submission by such
entities and its evaluation by the SERCs.
Clean Energy Transition: Increasing share of RE, adoption of cleaner fuels, improvement in the efficiency of
existing generation assets, and retirement of old, inefficient and polluting plants beyond their existing PPA should
be an integral part of the clean energy transition to be included in NEP. (Clause 5.6)
The current focus should be on de-carbonisation rather than de-coaling the sector completely. Improvement of the
flexibility of existing coal-based generation may support even higher RE share in the future.
Light-handed (touch) regulation: Greater competition and Performance-Based Regulation (PBR) would enable
light-handed (touch) regulation. Mandate competitive procurement in generation and transmission, and
graduated approach in distribution.
Light-handed (touch) regulation is applicable in the context of a sector achieving maturity in competition with
regulatory oversight. Given the current regulatory dispensation in the sector, competitive segments are subject to
light-handed regulation. (Clause 2.0 (vi))
If the objective of the policy is to reduce the regulatory process burden for the determination of tariff, this can be
implemented by graduating from Normative Cost of Service (nCoS) regulation to adopting PBR.
In the light of the above, (the objective of) “Development of adequate and efficient transmission system” may be

© CER, IIT Kanpur

2
 Regulatory Outlook
modified as 'Development of adequate and efficient transmission system at a reasonable cost through competitive
bidding'. (Clause 2.0 (ii))
An ABC Approach to Make in India initiative and Aatmanirbhar Bharat: “Promotion of manufacturing of
goods and services in India in the Generation, Transmission, and Distribution segments of the Power sector under
the Make in India initiative and Aatmanirbhar Bharat” are economically justified policy options. This should also
be linked to the provisions of the Electricity Act, 2003. To avoid disruption in investment and operation in the
sector, a graded approach should be adopted for the implementation of these policy options. An ABC analysis can
be used to help identify items based on existing domestic capability, scale economics, relative economics of
domestic and international manufacturing, technology requirement, scale of investment required, etc. Three (or
more) baskets of identified goods and services can be identified for promoting domestic manufacturing and
procurement over varying time horizons.
A - Very short term (say 6 months)
B - Short-term (1-2 years)
C - Medium-term (3-5 years)
However, it should be ensured that the policy does not lead to market concentration influencing the availability
and price of such goods and services. Further, this should also allow for continuity of supply and services for
existing contracts. The Ministry can issue a separate notification for the same. (Clause 2.0 (vii)) and (Clause 4.1
(xiv))
Review of Electric Power Survey and NEP: The National Electricity Plan, to be prepared by CEA, has been
delayed for a significant time. A regular release of the NEP is desirable to ensure that there is a general guideline
available about the approach to planning in the sector. The regularity of the Plan needs to be ensured in line with
that of the Electric Power Survey. An alternate approach would be, to develop a platform that allows necessary
changes to be incorporated in the Plan as subsequent reviews till a comprehensive revision of the same is
undertaken. (Clause 3.2)
Demand Side Management (DSM) may also be explicitly included in Clause 4.1 (ix) as one of the areas covered
under the policy.
Differential Generation Tariffs for peak and off-peak hours: Time-differentiated consumer tariffs provide a
relevant price signals to the consumers of electricity. However, a similar approach for generation tariff is not
desirable and would be complex to implement. Existing beneficiaries of PPAs bear the associated fixed charges
and hence, have a claim over the available generation capacity across the day. Separate determination (u/s 62) of
differential tariffs for peak and off-peak hours for such generating stations would not be economically justified.
(Clause 5.3)
Wider Applicability of ToD Tariff across Consumer Categories: Mandate ToD tariff for all consumers above
10 kW across consumer categories, to be gradually applicable to all consumers above 5 kW. All EV Charging to be
based on ToD tariff to ensure that there is sufficient visibility of this new load to assist load forecasting and
planning for the distribution network.
Determination of adequate primary, secondary and tertiary reserves at national, regional and state level, to be
undertaken by CEA should be based on long-term techno-economic feasibility to meet the projected demand
under growing RE share and be undertaken in consultation with key stakeholders including the Load Despatch
Centres. (Clause 5.4)
Competition in Generation and Transmission: NEP should emphasize the role of competition in power
procurement (including power plants to be set up in the state sector) as well as setting up of transmission assets
(inter- as well as intra-state) in the country. A UMPP approach, whereby land procurement and necessary
clearances have been obtained, would help significantly reduce the investor risk and lead to more competitive
price discovery. This would address the growing concern for rising transmission tariff. In the case of asset
specificity, particularly in the case of Large Hydropower projects, the “Swiss Challenge” approach may be
adopted. This would ensure competitive pressure (due to credible threat) to a tariff determination petition. (Clause
5.20, 6.8)
RE Curtailment: Curtailment of RE power is undertaken both for operational (system) as well as commercial
reasons. The regulatory framework should mandate the system operator to maintain a record of all instances of RE
© CER, IIT Kanpur
3
 Regulatory Outlook
curtailment along with system parameters enabling its analysis to identify reasons attributable to system
constraints. Availability of such detailed data in the public domain would allow its analysis and make the process
subject to regulatory scrutiny.
RE electricity generation (wind and solar) primarily have a fixed cost (single part) structure. Artificial segregation
of the single-part tariff into two-parts (fixed and variable) would depend on the debatable choice of CUF leading to
regulatory burden. Furthermore, given the 'must run' status of RE plants, a two-part tariff would not be
recommended. (Clause 5.21)
Separation of SLDCs from the State Transmission Utility (STU) and linking its RoE to curtailment of scheduled
RE within a reasonable range would help address curtailment concerns.
Derivatives for Risk Hedging for RE: Introduction of derivatives for RE would allow investors to hedge risk
arising out of uncertainty in generation as well as in curtailment. Curtailment-related RE derivatives can also be
used to ensure that part of the risk of curtailment be passed on to the DISCOMs who have signed PPAs for such RE
procurement. Such an approach to risk-sharing/hedging should become an integral part of the RE PPAs in the
future.
Separation of SLDC from STU: Separation of system operation from the state transmission utility, and further
separation of STU function from the intra-state transmission licensee would reduce conflict of interest, and also
improve the climate for open access and competition in the sector. Independence of SLDC would also help address
anomalies in the implementation of merit order despatch and RE curtailment due to non-technical reasons.
Incentives for heat recovery systems should be provided under the available mechanism for energy efficiency
through the Perform Achieve and Trade (PAT) scheme under the Energy Conservation Act, 2001. This could be
supported through an Energy Service Company. (Clause 5.22)
Single RPO Basket for Better Economics of Compliance: Given that the relative cost of alternate RE sources
has converged significantly, it would be economically efficient to specify a single RPO basket. Depending on local
resource endowments and economics of access to RE from elsewhere in the country, economically efficient
technology choices would be made to ensure overall RPO compliance, which would effectively displace the
equivalent amount of non-RE power.
Apart from economics, a single RPO basket would also provide flexibility in choosing an appropriate mix of
alternate RES that considers the availability of balancing power and other system constraints.
Rejuvenating the REC Market: The Renewable Energy Certificates (REC) market can be rejuvenated by
enhancing its scope by issuing REC to all RE generation (including that from non-REC plants) and using RECs to
identify the source of origin. The RECs acquired through PPAs as well as the REC market can then be submitted as
proof of compliance with the respective SERCs. This would enhance liquidity in the REC market as well. (Clause
5.24)
Further, there are also economic benefits from merging the market for ESCerts under the PAT scheme with the
REC market.
Technical, Financial, and Institutional Sustainability of Mini/Micro-grids: Electricity Access through micro-
grids is not an end to itself but an intermediate solution with an aim to provide 24x7 reliable and quality power to
consumers in rural as well as remote areas. Operational, financial, and institutional sustainability of micro-grids
needs to be ensured by harnessing their role in a grid integrated environment. (Clause 5.27)
Solarisation of Agriculture Pumps: Solarisation of agricultural load is an important option for the DISCOMs to
reduce cross-subsidy burden and address system losses. Given the experience with the development of mini-grids
and concerns for their sustainability, policy and regulatory framework for solarised agricultural load should
ensure technical, financial as well as institutional sustainability. To fully utilize the potential of the grid-connected
solarised agricultural pumps to feed electricity to the grid, such feeders would require to be charged (especially
during day hours). This, along with the growing availability of electricity across most states, may require a
reassessment of the overall economic benefits of feeder separation. (Clause 7.6)
Sub-licensee and Carriage and Content Separation: Given the existing legal framework under the Electricity
Act 2003, the SERCs would not have a legal basis to implement these proposals in the distribution segment.
Further, in the absence of clarity on the rights and obligations of the sub-licensee, there would not be a clarity with
respect to regulatory purview for the same, particularly those differentiating it from the distribution licensee and
© CER, IIT Kanpur
4
 Regulatory Outlook
the franchisee. A graduated approach to implement 'Carriage and Content Separation' should begin with its
implementation under a 'policy and regulatory sandbox' approach in a few identified areas that meet its
prerequisite especially with respect to metering.
The proposal under the draft NEP, being subordinate to the Principal Legislation, suggesting the need for an
Amendment of the Act itself needs a suitable legal support; else, it provides little basis for adoption by the SERCs.
(Clause 7.7)
Recovery of all 'Reasonable and Legitimate' Costs: By design, the normative cost of service regulation and
performance-based regulation does not provide for recovery of all 'reasonable and legitimate costs'. An
appropriate amendment to Clause 7.8 is thus required to support regulatory evolution in the sector. Further, a
number of investments (including that for improving quality of supply) can be and are being undertaken through
the OPEX model, hence should be incorporated herein. (Clause 7.8)
Distribution System Operator: Distribution System Operator (DSO) would play an important role in supporting
the growth of RE, improvement in operational performance of the sector, and emergence of competition in the
retail segment. To enable active DSM and load forecasting, there is a need to improve the visibility of behind the
meter generation and consumption. The significant growth in rooftop solar, particularly that behind the meter and
at the consumer devices, would continue to pose challenges in identifying and forecasting short-term electricity
demand, plan for distribution and transmission network, strengthening and extension, and make adequate
investment in generation capacity. DSOs would also play a key role in the emergence of peer-to-peer market in the
near future.
The evolution of a DSO should not be dependent on the adoption of separation of carriage and content but, would
enable its introduction later. (Clause 7.9)
Monthly data on feeder-wise energy accounting as well as reliability indices should be available in the public
domain to enhance the accountability of the DISCOMs. The distribution network planning should also take into
account the proposed rollout of smart grid and deployment of solar rooftops and/or storage by the consumers.
(Clause 7.13)
Distribution Plan: The National Electricity Plan, prepared by CEA, generally places emphasis on generation and
transmission planning while taking into account certain aspects of the distribution segment. Given that the CEA
was able to publish the National Electricity Plan for generation and transmission in 2018 and 2019 respectively, it
may be a challenging task for the CEA to engage with all the DISCOMs in helping to prepare the distribution plan.
Alternatively, CEA, in consultation with stakeholders, may develop a framework document to enable DISCOMs
to prepare their respective distribution plans, which would then be approved by the respective SERC. (Clause
7.13)
Optimising Long-term as well as Short-term Power Procurement: Long-term demand forecasting and power
procurement planning studies undertaken by the Energy Analytics Lab (EAL) at IIT Kanpur has demonstrated that
significant cost reduction can be achieved through periodical optimisation considering medium to long-term
projected demand profile against existing PPAs and available options for power procurement (including that
through the short-term market) and flexibility of available resources to meet the ramping requirement of a power
system with higher VRE share. Thus, the need for long-term as well as short-term options should be periodically
reviewed to avoid significant fixed cost burden to the utilities, and to the consumers. (Clause 7.14)
Given the growing role of the competitive market and the emergence of rooftop solar, solarised agriculture, and
demand response, the distribution licensees should not be expected to 'tie-up' adequate long-term capacity as they
can better optimise their power procurement portfolio by partly engaging in the short-term market. DISCOMs
should engage in active portfolio management using available short-term options while minimising risk for
availability and cost of electricity. (Clause 7.15)
National Metering Road Map: A time-bound, consistent, and cost-effective metering plan, in the form of a
National Metering Road Map, should be designed in consultation with the stakeholders and deployed through the
assistance of the central government. This should also ensure that existing investment in the meters should not
unduly lose its economic value thus burdening the consumers. Further, adequacy of the required digital ecosystem
and trained manpower should be ensured through such a program.
To ensure that there is sufficient political support for 100% metering of the consumers, the subsidy provided by the

© CER, IIT Kanpur

5
 Regulatory Outlook
respective State government should be tied up with the aggressive plan for 100% metering of the consumers.
Central government assistance package to a distribution licensee should compulsorily include a sub-package of
dedicated funding for consumers' metering. Overall funding should be linked to the achievement of metering
targets. (Clause 7.16)
Pre-paid Metering: Pre-paid metering is generally adopted in the case of consumers with bad credit history, or
vulnerable consumers who would like to limit their energy expenses. Deployment of pre-paid metering should be
made available as a choice to the rest of the consumers. For a certain class of vulnerable consumers' first tranche of
'pre-payment' (in full) through a DBT mechanism (to the licensee) would make the consumer indifferent to the
cycle of payments to follow.
A comprehensive replacement of all the existing meters with pre-paid metering may result in significant loss of
economic value (in the form of unrecovered depreciation) and hence, would require an appropriate cost-benefit
analysis. It is important to highlight that prepaid metering is not a natural choice of the private DISCOMs, and also
does not find universal application in the international context. (Clause 7.17)
Smart Meters and Demand Response Program: Deployment of smart meters would make it much easier to
implement a demand response program, if there are adequate regulatory provisions enabling the distribution
companies to offer appropriate financial incentives for consumers' participation, either directly or through an
aggregator. A credible demand response also enhances competition in the sector. Further, investment in smart
meters would have limited economic value unless there are appropriate regulatory initiatives to capitalise on the
capability of smart meters. (Clause 7.18)
Flexibility and Market for Ancillary Services: Increasingly higher penetration of Variable Renewable Energy
(VRE) places additional challenges on the system operator and also demands flexibility from various constituents
of the power system. Economic signals to enhance the flexibility of conventional generation should come from the
introduction of a market for 'fast response ancillary services'. This would ensure that appropriate technology
choice is made on the merits of its economic benefits to bring about desired technical characteristics. The market
signal would provide adequate incentive for such investment and also encourage better forecasting for short-term
demand as well as generation from VRE sources. (Clause 8.2)
Data Transparency and Data Access: Unavailability of system-level information, particularly at the state level,
makes it challenging to develop analytical tools that can help optimisation of available resources. This also
encourages academic research based on system data in the Indian context rather than that based on available
system information for other countries/regions.
Incentivise Feeder Level Performance Improvement: Monthly data on feeder-wise energy accounting as well
as reliability indices should be available in the public domain to enhance the accountability of the DISCOMs.
Monthly publishing of such information in the descending order of their AT&C/Distribution losses along with the
name of the concerning officers, can have a significant impact on operational performance. An incentive structure
can be designed to ensure that the associated officials get due recognition and economic benefits of better
performance.
Adequate transparency of network's transfer capability both for the inter-state as well as intra-state transmission
network should be available in the public domain to ensure that grant of open access, particularly for intra-state
transmission network, is not unfairly denied. (Clause 8.3)
Visibility of Behind the Meter Generation and Consumption: Increasing capacity for behind the meter
electricity generation reduces the visibility of such capacity and its generation profile, which will become an
increasing challenge to reliably forecast short-term electricity demand for the utilities as well as the system
operators. Rooftop solar capacity beyond a certain limit (say, 20 kWp) should be enabled for remote access of the
real-time generation consumption and storage data. For a small capacity rooftop solar generation, such
capabilities should be implemented on a sample of facilities, which should be invested by the respective
DISCOMs/SLDCs. (Clause 8.5)
Improve Information Access to DEEP Platform: The DEEP platform remains a black box for most of the
market participants, thus reducing the overall efficiency of the market. Easy access to information about the
contracts available and their economics through the DEEP portal, and the discovered prices and cleared volume
thereof would provide sufficient market signals for other market segments. Even while private participants may

© CER, IIT Kanpur

6
 Regulatory Outlook
not have access to the DEEP portal, the bridging of information asymmetry would enhance the competition in the
short-term power market as well. Furthermore, it also limits the ability of the developed optimisation tools to
assimilate this information in their decision-making on a real-time basis. (Clause 9.3)
Data Sharing Policy: The development of analytic tools and academic research depend significantly on the
availability of relevant data. The power sector generates a significant amount of data throughout its supply chain.
Energy Analytics Lab (EAL) at IIT Kanpur has taken the initiative to compile the available data and make it
accessible in visualised form through its portal (eal.iitk.ac.in). Unavailability of information, particularly at the
state level, makes it challenging to develop analytical tools that can help significant optimisation of available
resources (the key objective of NEP u/s 3 of the Act). Given its experience, EAL, IIT Kanpur would be willing to
pool resources to further assist in this endeavor.
CER's Regulatory Database: The Centre for Energy Regulation (CER), IIT Kanpur is developing a Regulatory
Database that would assist performance benchmarking and further evolution of the regulatory framework in the
sector. While most of this data is available in the public domain, significant disparity in data definitions across time
and space makes this a very challenging task. A common data format framework should address such anomalies
and also enhance its access.
Energy security and clean energy an integral part of all major investment decisions. To ensure that the country is
able to achieve reduction in emission intensity as per its international obligations and also go beyond that, all
relevant investment proposals and decisions across the sector (beyond an identified limit) should also assess the
contribution of such investment towards achieving this target (in line with the environmental impact assessment
undertaken for large projects. The aim to reduce energy intensity, thus, also becomes an integral part of the
decision-making in the sector in the long run and ensures smooth clean energy transition. (Clause 14.0)
Capacity Building Needs of the Power Sector: Centre for Energy Regulation (CER), IIT Kanpur has been
actively engaged in addressing capacity building needs of the sector particularly that covering aspects related to
regulation, power market as well as renewable energy integration. We note that needs for capacity building are
widely understood and addressed in the regulatory system; however, the regulatory entities particularly at the
state-level have limited participation in such endeavors. This limits the ability of such entities in engaging
fruitfully in the regulatory processes at the state as well as central level. A broad-based policy, incentivising such
continuous engagement, would help understand and assimilate various reform-linked programs and contributing
more effectively to discussions thereof.

MoP: Redesigning the Renewable Energy Certificate (REC)

Mechanism [Discussion Paper]
The Ministry of Power issued a discussion paper on “Redesigning the Renewable Energy Certificate (REC) Mechanism”
th
on 07 June, 2021. Some of the important insights are given below:
Key objectives:
 To increase the share of non-fossil fuel-based electricity energy to meet the international target of 175 GW by 2022
 To maintain the future energy security by promoting the new RE technologies such as offshore wind, Hydrogen,
Pumped storage hydro plants, etc.
Proposal for the redesign of REC Mechanism:
❖ Validity period of RECs and Floor & Forbearance Price:
 The REC validity period may be removed i.e. perpetual validity till it is sold
 The floor and forbearance prices are not required to be specified as RECs holders would have the complete
freedom to decide the timings to sell
 CERC may intervene in cases of malpractices observed in the REC trading
❖ Period for which the RECs are to be issued to RE generators: Eligible RE generators will be eligible for issuance of
RECs for 15 years from the date of commissioning of the projects and 25 years for the existing RE project
❖ Promotion of new and high-cost technologies in RE and the provision of multiplier for issuance of RECs
 The concept of the multiplier, negative list, and sunset clause can be introduced for various technologies
© CER, IIT Kanpur
7
 Regulatory Outlook
depending upon their maturity level
 For new RE projects that need to be promoted will be provided at least 15 years of policy visibility to attract
investments and promotion
❖ Incentivising obligated entities for procurement of RE power beyond RPO
 Option 1: Only DISCOMs to be issued RECs for quantum beyond RPO compliance (additional benefit of REC
need not be given to Open Access (OA) and Captive Power Plant (CPP) consumers)
 Option 2: RECs can be issued to the obligated entities that purchase RE Power beyond their RPO compliance. This
would facilitate and promote the REC market
 No REC to be issued to the beneficiary of the concessional charges or waiver of any other charges

CER Opinion
Floor and Forbearance prices: In its earlier comments to CERC, the relevance (or rather irrelevance) of the floor
and the forbearance price was highlighted. Given an efficient market, artificial and rather arbitrary fixation of floor
price introduces distortions. Singh (2010) highlighted the anomaly in fixation of floor price and how it would give
windfall gain to existing players under the regulated tariff contacts, i.e. Feed-in Tariff (FiT) contracts, to exit and
sign another one under the REC framework. (Section 5.1)
With the RECs having a perpetual validity, the relevance of floor price is further diminished. Furthermore,
compliance penalty for RPO shortfall (as applicable in respective states, if any) indirectly translates into a
forbearance price (See Singh (2010) for further discussion on the same).
REC as Unified Framework for “Guarantee of Origin”: The REC framework should be expanded as a unified
framework for “Guarantee of Origin”. Non-REC projects do not have a guarantee of origin certification at present.
This currently serves the purpose as the system operator and the distribution utility can identify the energy injected
through the metering infrastructure. However, there is such certification to allow this 'green energy' to be identified
and traded further in the market. By issuing RECs to all RE projects (including those under FiT framework, captive
as well as merchant RE capacity) in the country would have the following advantages,
 Ensure full visibility of RE energy footprint across the country.
 Unified 'Guarantee of Origin' certification across all RE technologies
 Enable the obligated entities (DISCOMs) to offload, in the form of RECs, excess RE procurement
beyond their RPO, particularly which on account of contracts signed under the FiT framework.
 Develop a retail market for 'green electricity', wherein distribution utilities can sell a 'green electricity
product' to willing consumers.
Banking of RECs and Roll over of RPO Generators / Obligated Entities: With the perpetual extension of the
period of validity of RECs, the need for allowing banking of RECs by the REC project developers themselves is
obviated. However, the obligated entities (distribution licensees, and OA and CPP consumers), having over-
achieved their RPO target (through procurement from projects under FiT framework), should get an option to
offload the same. This can be achieved with greater flexibility if all RES-based electricity generation in the country
is issued RECs to certify their origin. (Section 5.1)
Secondary Market for RECs: It is important to note that excess procurement of equivalent RECs can be avoided
to some extent but cannot be overruled. A provision for the secondary market for RECs by allowing its open re-
trading would provide additional liquidity and efficiency in the market with proper regulatory oversight. This
would also generate interest of common investors as this would also facilitate more regular trading in RECs.
REC Derivatives: Introduction of the derivatives market for electricity is under discussion for some time.
Derivatives for the REC market would open up risk mitigation strategy for the obligated entities as well as
investors in REC based projects. In combination with the secondary market for RECs, REC based derivatives open
up a new vista for further improving the efficiency of the REC market.
Issuance of RECs for 15/ 25 years: It is discussed in the paper that the RE generators will be eligible for RECs till

Singh, A. 2010. “Economics, Regulation and Implementation Strategy for Renewable Energy Certificates in India” in India
Infrastructure Report 2010, Oxford Univ. Press. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3440253
© CER, IIT Kanpur
8
 Regulatory Outlook
15 and 25 years for new projects and existing projects, respectively. This does not provide a level playing field for a
REC-based projects in comparison to the projects under the FiT regime or those who can participate in GTAM/
GDAM market till the end of PPA/project life, as applicable. (Section 5.2)
To address the anxiety of the investors in REC-based projects, a clarification about the eligibility of such projects
to freely participate in the green market platform, beyond the 15-year REC issuance period as well.
Multiplier and Sunset clause: The application of multiplier and sunset clause would promote and provide
upfront support to the new high-cost RE technology in its initial stages. This was one of the key suggestions ever
since the discussion on introduction of the REC market began in India. The concept of multiplier and sunset clause
should be appropriately applied in their respective context as discussed below. (Section 5.3)
The concept of the sunset clause is to be applied for a technology over a 'period of time'. This can be implemented
by adopting a reducing REC multiplier for the identified technology. To ensure that the technology developers,
suppliers, investors as well as financial institutions work towards reducing the overall capital and operation cost,
the multiplier associated with the sunset clause should be predefined for a period of 5- 7 years. This may be subject
to a mid-term review after a 3-4 years. This would provide better regulatory certainty for a technology.
The relative REC multiplier across technologies should be tuned to the relative cost differentiation across the
technologies. A periodic adjustment should only be applied after considering the Levellised Cost of Electricity
(LCOE) of RE electricity discovered primarily through a competitive basis, and also taking into account the
ongoing technological developments, and international cost benchmarks for projects setup through competitive
basis.
Setting up a proper trajectory for the multipliers would provide a cost benchmark targets for RE technology
developers and investors. The figure below explains the two concepts. It should also be noted that the multipliers
are to be linked to the identified base year and should be reduced over a period of time.

1st Yr. 2nd Yr. 3rd Yr. 10th Yr. 15th Yr.

Solar
Multiplier 1x 1x 1x 0.5x 0.5x
Technology
Multiplier (in a given year)

On-shore 1x 1x 0.5x 0.5x

Multiplier 1x
Wind

Pumped
Multiplier 4x 4x 3.5x 2x 1x
Storage

Off-shore Multiplier 4x 4x 3.5x 2x 1x

Wind

Sunset Clause (Technology matured over the years)

Figure: Multiplier & Sunset clause

Note: Further debate is required to differentiate the 'energy' and the 'storage' value of pumped storage based hydro
plants. Therefore, if a new project starts at 3rd year, the multiplier should be 3.5x and not 4x as the particular may
have gained some maturity over 3 years.
Given that REC based projects, particularly solar projects, would effectively face a negative REC price (as APPC
>> LCOE of solar PV, as competitive price benchmark for solar have declined significantly below the APPC), the
REC multiplier for solar should be pegged much lower in comparison to other technologies to promote the later.
Option 1: Only DISCOMs to be issued RECs for quantum beyond RPO compliance: RPO compliance would
be established only after the completion of a (financial) year for all the obligated entities including DISCOMs. In
such cases, the decision to allot REC for excess RE procurement on ex-post basis would be procedurally difficult
as the quantum of such RE procurement would not be known. Furthermore, it would not be feasible to uniquely
identify (non-REC) projects from which such REC would need to be allocated and apportioned. (Section 5.4)
In contrast, the above-mentioned suggestion for using RECs as a guarantee of origin would avoid all such concerns
and make the process much simpler.

© CER, IIT Kanpur

9
 Regulatory Outlook
No REC to be issued to the beneficiary of the concessional charges or waiver of any other charges: The
process to find out all the beneficiaries (RE generators) those may have been provided concessions of various
sorts, i.e. waiver of transmission charges or preferential banking charges etc, would be a time-consuming and
tedious task. This will raise the significant cost of administrating it also raises a number of legal disputes as the
value of a number of concessions may vary across projects but all of which may be denied the REC benefit.
(Section 5.5)
As per the current order issued by MoP, dated 21st June, 2021, the waiver of Inter-State Transmission System
(ISTS) charges on the transmission of electricity generated from Solar and Wind sources is extended for projects to
th
be commissioned up to 30 June, 2025. Implications of such policy and regulatory changes cannot be predicted
beforehand and hence, raise the concerns for regulatory and policy uncertainty.
Merging the REC and ESCerts market under the PAT scheme: Singh (2009) proposed merger of an energy
efficiency certificate scheme that may be launched in future (This was later launched under the PAT scheme) with
the then suggested REC market. Given the common decarbonisation attribute of the REC and the ESCerts, merger
of the later market in the former would provide numerous benefits for the both. This would not only enhance the
overall cost effectiveness of cost of compliance by the obligated entities (for RPO as well as energy efficiency
target under the respective framework) but also enhance the footprint of the RECs+ESCerts market, provide
missing liquidity and efficiency to the ESCerts market.
Implementation of this suggestion would require adoption of a conversion multiplier (i.e. finding the number of
REC equivalent for each ESCert), which can be determinate on the basis of the relative decarbonisation under the
two schemes.

MoP: Electricity (Rights of Consumers) (Amendment)

Rules, 2021 [Draft]
th
The Ministry of Power issued a draft amendment to the Electricity (Rights of Consumers) Rules, 2021on 9 April, 2021.
These rules may be called the Electricity (Rights of Consumers) (Amendment) Rules, 2021.
Key points of the proposed amendment Rules are:
❖ Definitions of “Gross-metering”, “Net-metering” and “Net-billing or net feed-in” may be added in sub-rule to the
Rule 2 of the Electricity (Rights of Consumers) Rules, 2020
❖ The Commission may allow net metering to the prosumer for loads up to 500 kW or up to the sanctioned load,
whichever is lower, and net-billing or net feed-in for other loads
❖ Prosumers are incentivised to install energy storage so that stored solar energy can be utilized by them or fed into the
grid during peak hours

CER Opinion
Rule (2) of the Amendment Rules:
“Gross-metering:… the total solar energy generated from Grid Interactive Rooftop Solar PV system of a
Prosumer and the total energy consumed by the Prosumer are accounted separately through appropriate metering
arrangements.”
As per the definition specified in sub-rule (m) to Rule 2 of the Electricity (Rights of Consumers) Rules, 2020,
“prosumer means a person who consumes electricity from the grid and can also inject electricity into the grid for
distribution licensee, using the same point of supply”. It is not clear if 'appropriate metering arrangements' include
more than one metering arrangement (required for gross metering cases) as it may conflict with the condition of
'using the same point of supply'.

Singh A. 2009. A market for renewable energy credits in the Indian power sector, Renewable and Sustainable Energy Reviews; 13(3):
643-652. https://doi.org/10.1016/j.rser.2007.10.011
© CER, IIT Kanpur
10
 Regulatory Outlook
Rule (3) of the Amendment Rules:
“… The Commission may allow net metering to the prosumer for loads up to five hundred kW or up to the
sanctioned load, whichever is lower…”
A number of consumers, particularly large commercial and industrial consumers, have a 'contract demand' with
the licensee instead of 'sanctioned load'. Unless both are construed to mean the same, the above sentence may be
reconstructed as “… for loads up to five hundred kW or up to the sanctioned load or contract demand (as the case
may be), whichever is lower…”
Time-of-Day Tariff:
“… Commissions may introduce time-of-the-day (ToD) tariffs whereby Prosumers are incentivised to install
energy storage so that stored solar energy can be utilized by them or fed into the grid during peak hours …”
'Commissions' should be replaced with 'Appropriate Commission'.
ToD based tariff option should be available to all consumers above 5 kW and be mandatory for consumers above
10 kW. This would encourage consumers to install storage solutions and/or adopt demand side management
options. On-site economical storage would also help long-term reduction in peak demand and hence, the Resource
Adequacy to meet the same.
Feeder Separation and Solarised Agriculture Pump sets: To fully utilize the potential of grid connected
solarised agricultural pumps to feed electricity to the grid, these feeders would be required to be charged
(especially during day hours). Evaluation of an investment towards feeder segregation in future should consider
this additional requirement.

HPERC (Security Deposit) (Fourth Amendment)

Regulations, 2021 [Draft]
HPERC issued a draft fourth amendment of "HPERC (Security Deposit) Regulations, 2021" on 22nd April, 2021. The key
rd th
highlights and the comparison made between the Regulations post 3 amendment and 4 amendment (draft) are :
Third Amendment Fourth Amendment (Draft)
Factor for security deposit (n + 1.35)* (n + 1)*
Security deposit amount amount equivalent to the average bill (include net of arrears and subsidy) for (n + 1) months
(excluding arrears but including late based on the bills raised to the period of 12 billing
payment surcharge, if any) for (n + 1.35) months immediately preceding the date of such
months based on the bills raised to the demand “the amount equivalent to the average
period of 12 billing months (April to monthly bill (net of arrears and subsidy, if any) for
March) of the immediately preceding (n + 1) months based on the bills raised to the period
year of 12 billing months immediately preceding the date
of such demand”
Calculation of security Based on LDHF# formula Based on the category-wise rates provided in sub-
deposit rates regulation (2) of regulation 5
Base for calculating Average monthly bill of the previous year Average monthly bill of the previous year
security deposit rates
Mode of payment Cash/Demand Draft (DD) Cash/Demand Draft (DD)/Electronic mode
Increment in initial Annually 5% (every 3 years)
security deposit rates
Review period of Annually 1st day of quarter just before the quarter in which 6-
additional security deposit month tenure ends
Additional security Shall not exceed 30% of the average Shall be payable in 3 equal quarterly instalments and
deposit monthly bills raised to the period of 12 1st such instalment shall be payable within 60 days
billing months (April to March) of the from the date on which demand is raised
immediately preceding year
Adjustment of security Amount recovered to be apportioned Balance amount shall be apportioned on pro-rata basis
deposit for permanent against the security deposit for balance against the security deposit for the balance connected
reduction load, as per rates for the FY 2020-21 load
© CER, IIT Kanpur
11
 Regulatory Outlook
*where n is the number of months in a billing cycle
#
LDHF Formula: Rate of Initial Security Deposit in ( /kW) of connected load = L*D*H*F*T*(n+1.35) or per kVA of
Contract Demand
L: connected load for applicant falling under single-part tariff/contract demand for those under two-part tariff
D: average number of working days for the relevant tariff category
H: number of hours per day for which power is used on an average basis
F: demand factor for the respective category of consumers
T: average tariff in /kWh or /kVAh in accordance with the retail tariff order of the Commission

CER Opinion
Security deposit for the supply of electricity: In relation to the security deposit amount & base for calculating
security deposit rates mentioned in the draft Regulation, following measures are suggested:
 Apart from the average bill, the calculation of security deposit should also consider any arrears to reflect the
higher commercial risk associated with such customers. A good credit history over the next 6 months should
lead to recalculation of the security deposit and the excess amount be adjusted against the bill of the preceding
billing cycle. The inclusion of arrears in the calculation of the average billing amount should disincentivise
delay in bill payment. (Regulation 4.3)
 The average billing amount, apart from the adjustment for arrears suggested above, is the amount due to the
utility on account of the bills raised by it, and hence should not require any adjustment on account of subsidy
either accounted for in the ARR or directly paid to the consumers under a direct benefit scheme.
Mode of Payment: The draft Regulation provides three modes of payment viz. Cash, Demand Draft (DD) and
Electronic mode. However, it is advised that any shortfall in the security deposit can also be adjusted against the
net payable (in cash or in energy terms) to be paid by the utility to consumers with solar rooftop plants having net-
metering/gross-metering arrangements. (Regulation 4.4-4.7)
Refund/Additional Security Deposit due to the Change in Sanctioned Load/Contracted Demand:
Regulation 8.2 only accounts for the reduction in security deposit due to the reduction in sanctioned
load/contracted demand. In case the consumer seeks an increase/reduction in the sanctioned load/contracted
demand, the use of historical average monthly bill will not be an appropriate basis for calculation of security
deposit rate. The security deposit amount should be proportionately increased/decreased based on the desired
increase/decrease of the sanctioned load/contracted demand. Hence, while amending Regulation 8, the case for an
increase in security deposit on account of the increase in sanctioned load/contracted demand should also be
incorporated. (Regulation 8)
Method of Calculation of Initial Security Deposit Rate:
 The draft Regulation provides a table for the initial security deposit rates. The Regulation should clearly
differentiate the method of calculation of security deposit rate for consumers with monthly and bi-monthly
billing cycle. Since, security deposit is expected to address the risk associated with non-payment of bill of 'a
billing cycle', security deposit calculation for consumers with bi-monthly billing should consider average
billing over the billing cycle in place of average monthly billing. Since, this may result in additional security
deposit demand from such consumers, it is suggested that this scheme be implemented on a graduated basis,
and delayed for some time given the prevailing pandemic scenario. (Regulation 5.2)
 The Commission may like to consider lowering the load limit of 20 kW to be reduced (say, 10 kW) for
applicability of the security deposit rate of 165 per kW as the reduced rate should be available for the smaller
consumers only.

Proposed Amendments in JERC for the State of Goa & UTs

(Electricity Supply Code) Regulations, 2018 [Draft]
JERC (Goa & UTs) proposed amendments in “JERC (Electricity Supply Code) Regulations, 2018” on 12th May, 2021.
These are called JERC (Electricity Supply Code) (Second Amendment) Regulations, 2021.
© CER, IIT Kanpur
12
 Regulatory Outlook
The proposed amendments are given below:
❖ Tenant added in the definition of “occupier”. (Clause 2.3(52))
❖ Definition of standby meter expanded by including all new connections of 11 kV and more (up from 33 kV in 2018
Supply Code). (Clause 2.3(63))
❖ Definition of a new term “Initial period of agreement” is introduced. This period is as follows in the proposed
regulation: (Clause 2.3 (41a))
 LT connection: 6 months
 HT connection: 1 year
 EHT connection: 2 years
❖ Domestic consumers having contracted demand up to 25 kW (up from 20 kW) exempted from installing power factor
correction device. (Clause 4.7)
❖ Licensee asked to add an option of mobile app for availing new connection in addition to the existing avenues in 2018
Supply Code. (Clause 5.26)
❖ The applicant provided another chance of applying for a new connection. After the expiry of 2 months (which was the
deadline 2018 Code), a one-time option for the revival of lapsed bills has been given for 2 more months after payment
of twice the demand notice extension fee. (Clause 5.49)
❖ Requirement for NOC from the previous occupant in case of transfer of connection is removed. Now, the security
deposit of the previous owner is transferred to the new owner without any NOC or additional security. In case of
multiples owners, transferred in the name of the first owner, or a joint connection if so required. (Clause 5.87)
❖ Amended to deal with change in ownership due to transfer to the legal heir. Earlier the security deposit lying with the
licensee was transferred to the legal heir and a shortfall in the same was payable by the applicant. The proposed draft
states that no additional security deposit shall be charged. In case of multiples owners, deposit will be transferred in
the name of the first owner, or a joint connection if so required. (Clause 5.88)
❖ Prepaid meters should be installed with the MDI facility that 2018 Code recommends. (Clause 6.7)
❖ In case of domestic connections, higher of cooling load (air conditioners, coolers etc.) or heating load; excluding
equipment used for cooking (geysers, heating rod etc.)is to be taken for determination of Total Connected load.
(Annexure VIII)
❖ For calculation of security deposit amount, formula has altered from the 2018 Supply Code as follows: (Annexure
XVIII)
Previous formula:
Security deposit = [Load x Load Factor x 30 days] + [30 days x 24 hours x Current tariff]
Proposed formula:
Security deposit = [Load x Load Factor x 30 days] + [30 days x H hours x Average Billing Rate]
Changes:
 Calculation for Load to be calculated using updated Annexure VIII
 24 hours replaced by 'H' hours (that varies for different categories, and hence, will reduce security amount burden)
 Current tariff replaced by Average Billing Rate (ABR)

CER Opinion
Load Factor: The definition of Load factor may be modified as:
“Load Factor” is the ratio of the total number of units consumed during a given period to the total number of units
that would have been consumed, had the load been maintained at the sanctioned load or contracted maximum
demand level throughout the same period.(Clause 2.3 (47))
Occupier vs User of Electricity: The legal repercussions of use of the term “occupier” should be vetted. This may
be of concern in case a property is under dispute. The notion of 'occupier' should not have a reflection on property
© CER, IIT Kanpur
13
 Regulatory Outlook
right. The term may be replaced with “user of electricity”. (Clause 2.3 (52))
Standby Meter: The amended definition of the “standby meter” may be modified as:
“Standby Meter” means a meter connected to CT and VT, other than those used for the main meter and check the
meter and shall be used for accounting and billing of electricity in case of failure of the main meter for the existing
consumers having a standby meter, and all new connections at the voltage level of 11 kV and above to be issued
after notification of these Regulations.” (Clause 2.3 (63))
Initial Period of Agreement: In the light of the new definition of “Initial Period of Agreement”, the supply code
should clarify if a new consumer would need to periodically extend the agreement after the expiry of an initial
period of agreement. In such a case, the modalities for the extension of the agreement (beyond the initial period of
six months/one/two years, as applicable) should be clarified. Provision for automatic extension of the agreement
with no cost implications would assuage concerns of the consumers. (Clause 2.3 (41a))
Adequacy of Power Factor (PF) & Installation of Shunt Capacitors: Small consumers, particularly in the case
of domestic and commercial categories generally have a sanctioned load, whereas large consumers (such as
industrial consumers) have a contracted demand. An appropriate term representing 'load' should be used in case of
this clause as well as elsewhere in the code. (Clause 4.7)
The allowed duration for installation of PF correction device (Clause 4.7 (a) & (b)) seems relatively relaxed and
may be reduced to four (04) months and six (06) months respectively, for the domestic and commercial consumer
specified set of consumers. The licensee should also include the provision for filing application for modification of
connection and following status thereof in addition to the procedure for new application (through web/app etc.).
This would minimize the need for a physical interface, especially given the current circumstances. (Clause 5.26)
Clause 5.49 refers to 'revival fee being twice the extension fee' whereas the code does not define and specify the
extension fee. If defined elsewhere, the appropriate document may be referred to.
Transfer of Connection:
 The phrase “The application form shall be accepted on showing proof of ownership/occupancy of property”
may be reworded as 'The application form shall be accepted on showing proof of ownership/occupancy/
tenancy of property'. (Clause 5.87)
 In case the property is under a legal dispute, transfer of security deposit to the 'occupier' may not be justified and
may need to be vetted legally.
Prepaid Meter - Exemption from Security Deposit: In case of consumers with prepaid meters, the requirement
for security deposit should be waived while ensuring sufficient advance payment thereof. Furthermore, the
provision of refund of such security deposit should also be included for such consumers.
Determination of Load: Procedure of determination of connected/sanctioned load for domestic connection as
laid out in Annexure-VIII should be further revamped, while considering some of the following points. The
domestic electrical equipment's list and equipment rating should be restructured as per changing pattern of device
ownership and the current standard. (Annexure-VIII) For example - LED bulbs, electric chimney, water purifiers,
dishwasher, etc. merit inclusion in the list. Smaller load on account of Wi-Fi routers, mobile chargers, etc. may be
counted as miscellaneous load. Furthermore, the specified load, particularly for AC has come down over the past
few years due to adoption of efficient technology assisted by the Star rating scheme. It is expected that efficient
ACs (as compared to those listed in Annexure-VIII) would be installed by consumers due to their wider
availability and sale. It is likely that in a few years an insignificant inventory of old AC would remain in operation.
Load extension/revision in the future should also consider such changes.
 Counting of load for both heaters as well as cooler/AC, which is not usually going to be used concurrently,
should be reconsidered.
 An alternate approach would be to count the load of electrical switches, and plug points that may allow the use
of different types of devices while also considering the coincidental utilization of the same.
In Annexure-XVIII, for the calculation of security deposit amount for a consumer, the formula should use
'Sanctioned Load/Contracted Demand' in place of "load".

© CER, IIT Kanpur

14
 Regulatory Outlook
Proposed OERC (Procurement of Energy from Renewable
Sources and its Compliance) Regulations, 2021 [Draft]
Odisha Electricity Regulatory Commission (OERC) proposed a draft regulation for 'Procurement of Energy from
th
Renewable Sources and its Compliance' on 27 April, 2021. Key points of this draft regulation are given below:
❖ Co-firing of biomass in coal-based thermal power station – Non-Solar RPO
❖ Roof-top Solar PV system under net metering agreements – Solar RPO
❖ Large Hydro power projects (>25 MW and that started commercial operation after 8th March, 2019) including pumped
storage projects – HPO
th
❖ If generation from qualified LHPs is inadequate to meet HPO, small hydro commissioned on or after 8 March, 2019
will be eligible for HPO fulfilment. If small hydro generation exceeds the optimal HPO trajectory in such situations,
the surplus would be classified as "Other Non-Solar RPO".
Minimum quantum of electricity to be procured from Renewable Sources by Obligated Entity as
percentage of total Consumption in kWh
Non-Solar RPO
Solar RPO Total RPO
Year (in %) Other Non-Solar Total Non- Solar (in %)
HPO (in %)
RPO (in %) RPO (in %)
2021-22 7.25 0.18 5.82 6.00 13.25
2022-23 8.00 0.35 6.15 6.50 14.50
2023-24 8.75 0.66 6.59 7.25 16.00
2024-25 9.75 1.08 7.17 8.25 18.00

CER Opinion
Technology Neutral RPO: Cost of procurement from solar power plants has been on a decline, and is now even
less than other RES. It would be appropriate to dispense with technology-wise RPO differentiation as solar and
non-solar RPO. This would reduce the overall cost of compliance for the obligated entities.
Purchase Obligation from Renewable Sources: The draft regulation considers co-firing of biomass in coal-fired
thermal power plants as renewable energy and which shall be eligible for non-solar RPO. It is also important to
specify a framework for verification of the extent of co-firing of biomass in coal-fired thermal power plants to
enable proper estimate of its contribution towards RPO. (Clause 4.1)
Consequences of Default: The draft regulation states that non-compliance of RPO would result in penalty which
can be calculated by the State Agency as below: (Clause 10.1)
Penalty = Shortfall in units of RPO * Forbearance price
 As forbearance price for HPO is not defined, a clarification is needed regarding the calculation of penalty for
non-compliance of HPO.
 In its absence, it is recommended to use non-solar forbearance price in the case of HPO, as HPO is categorized
under non-solar RPO.

Further readings:
1) #Comments on “Electricity Act, 2003 (Amendment 2020) (Draft)”
2) #Comments on “CERC's Proposal for Determination of Forbearance Price and Floor Price for the REC Framework” – March, 2020
3) @Comments on "Draft Terms and Conditions for Exchange of Energy Savings Certificates Regulations",CERC, 2016
4) @Comments on “Draft Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy
Generation (Second Amendment) Regulations, 2013”
5) @Comments on “Determination of Forbearance and Floor Price for REC framework, Central Electricity Regulatory Commission, July
2011”
6) @Comments on “Setting a Floor and Forbearance Price for Renewable energy Certificates (RECs), Central Electricity Regulatory
Commission, April 2010”
7) @Comments on “Draft CERC regulation for REC Framework Implementation 2009, issued by Central Electricity Regulatory
Commission, Nov. 2009”
Above regulatory submissions can be accessed from
# https://cer.iitk.ac.in/blog
@ https://www.iitk.ac.in/ime/anoops/regulatorypolicy/index.php

© CER, IIT Kanpur

15
 ERC Tracker
Regulatory Updates
Tariff Industrial and LT Commercial consumers in a billing
cycle up to 31st March, 2022 on the case filed by Kalika
Steel Alloys Pvt Ltd. and 27 others.
HPERC determined the price of GoHP
Free Power for FY22 at 2.49/unit for MERC allowed a depreciation amount of 7.23 Cr.
purchase by HPSEBL. This Order will @6.49% for FY 2014-15 for the retail supply business of
remain into effect for FY 2021-22 i.e. till Tata Power Company Limited (Distribution).
st
31 March, 2022. MERC clarified on the applicability of Tariff to Hotels
The HPERC decided to retain all the provisions of the pursuant to the Government of Maharashtra Resolution
rd
draft amendment of HPERC (Cross Subsidy Surcharge, dated 3 December, 2020, a case filed by Adani
Additional Surcharge and Phasing of Cross Subsidy) Electricity Mumbai Limited (Distribution). MERC
(Second Amendment) Regulations, 2021 without any directed unless the Maharashtra government provides
changes in it. advance subsidy under Section 65 of the Electricity Act,
2003 on account of the reduced tariff amount due to the
KSERC has approved the following after consideration of hotel business from Commercial to
consideration of the M/s. Technopark's Industrial category, Distribution Licensees shall
application for truing up of accounts for continue to levy commercial tariffs on hospitality
the year 2018-19: businesses as approved in their respective Tariff Orders.
 Total revenue is 6423.57 lakh th
MERC approved the PPA dated 27 May, 2021 entered
 Total expenditure is 5926.08 lakh
between KRC DISCOMs (Mindspace Business Parks
 The revenue surplus for the year is 497.49 lakh
Private Limited; Gigaplex Estate Private Limited; KRC
 The revised accumulative revenue surplus up to Infrastructure and Projects Private Limited) and Kreate
2017-18 is 1183.38 lakh. Total cumulative revenue Energy (I) Pvt. Ltd. – Power Department of Sikkim. The
surplus till 2018-19 will be 1680.87 lakh ( 1183.38 Commission also adopted the Tariff determined through
lakh + 497.49lakh) transparent bidding process for the Short-Term
KSERC has approved the following after considering the procurement of power up to 14 MW (RTC) for one year
petition filed by M/s Rubber Park India Private Limited starting from 1st July, 2021 to 30th June, 2022 through
(RPIL) for truing up of accounts for the year 2018-19: combined power procurement.
 Total income is 1914.26 lakh PSERC determined additional surcharge
 Total expenditure is 1801.27 lakh applicable for the period 1st April, 2021 to
th
 The revenue surplus for the year is 112.99 lakh 30 September, 2021 as under:
 The revised accumulative revenue surplus up to
2017-18 is 132.62 lakh. ( 137.01 lakh – 4.39
PSPCL in
lakhs) Particulars
the Petition
PSERC
 Total cumulative revenue surplus till 2018-19 will be
Additional Surcharge payable by full open
245.61 lakh ( 132.62 lakh + 112.99 lakh) and partial open access consumers for
1.22 1.16
MERC approved the revised power availing open access beyond the contract
/kWh /kWh
procurement plan of Maharashtra Airport demand maintained with the distribution
licensee
Development Company Ltd., however,
Additional Surcharge payable by partial
rejected the adoption of tariff of
open access consumers for availing open 0.93 0.83
5.25/unit. It has allowed Maharashtra access upto the contract demand /kWh /kWh
Airport Development Company Ltd. to maintained with the distribution licensee
keep on scheduling power against LoA issued by it at rate
of 5.25/kWh for consumers in MIHAN SEZ. TSERC provided liberty to M/s Kallam
MERC did not allow Rattan India power Limited Spinning Mills Pvt. Ltd. (the Petitioner)
(Amravati) for interim relief relating to the direction for to sell power and directed NPDCL to
50% payment of outstanding due amount towards energy purchase the balance 70% energy out of
supplied to MSEDCL under PPA dated 22nd April, 2010 generated 4 MW (i.e. 2.80 MW) @
th
and 5 June, 2010. 3.03/kWh i.e. at the same tariff as is being
procured for 29% energy (1.16 MW) under PP&CWA,
MERC issued Practice Direction allowing revision in till the end of tenure of PP&CWA i.e. upto 28th January,
Contract Demand up to 2 occasions to HT Industrial and 2022.
HT Commercial consumers and up to 1 occasion to LT

© CER, IIT Kanpur

16
 ERC Tracker
Regulatory Updates

Power Procurement Business) Regulations, 2019 was null and void. The
Commission dismissed and disposed of the present
rd
petition(s) on 23 June 2021.
DERC ordered that while making The KSERC has approved the initialed
alternate connectivity arrangements, the Power Purchase Agreement (PPA)
Timarpur Okhla Waste Management Co. between KSEB Ltd and NTPC Ltd for the
Ltd. will be entitled to captive generation procurement of 90 MW Solar Power at
th
as provided in the EPA dated 20 January, the rate of 2.97/unit.
2010 and amended EPA dated 27th July,
The Commission has approved the initialed Power
2011, and that if the Timarpur Okhla Waste Management
Purchase Agreement (PPA) between KSEB Ltd and M/s
Co. Ltd. fails to make alternate connectivity
Tata Power Company Limited for the procurement of
arrangements, he will not be entitled to the benefit of this
110 MW Solar Power at the rate of 2.97/unit.
clause. It is also mandated that BRPL get 50% of the
maximum yearly generation at ex-bus, which is The Commission has granted permission to KSEB Ltd.
equivalent to 56.94 MUs with a maximum of 60 MUs per to sign the PPA with M/s TP Saurya Limited, the 100%
year. subsidiary of the successful bidder M/s Tata Power
DERC gave the subject careful deliberation and came to Company Limited. The agreement dated 23rd March,
th
the decision that the TPDDL should contact MNRE for a 2021and its amendment dated 9 June, 2021 signed
deviation and request approval for the variation in regard between M/s TPCL and its 100% subsidiary TP Saurya
to the bidding documents. Ltd shall form integral part of the PPA to be signed
between KSEB Ltd and TP Saurya Ltd.
The Commission has notified DERC (Terms and
Conditions for Open Access) Regulations, 2005 The Commission considering the request by the
facilitating Open Access in Delhi. Timarpur Okhla Waste petitioner M/s KSEB Ltd has approved the following
Management Company Ltd. shall apply to the concerned tariff for 35W, 70W & 110W LED Street Lights for
SLDC as specified in the Regulations for sale of power to enabling KSEB Ltd. to raise monthly electricity bills on
third parties subject to meeting its obligations under the LSGDs especially for the NILAAVU Scheme (a project
EPA/PPA, as amended. of Government of Kerala to replace all conventional
street lights with energy efficient LED lights for
HERC approved procurement of 500 MW illuminating all roads and sub-roads of Grama
short-term power from the sources and Panchayats, Municipalities and Corporations) :
cost as proposed by the HPPC from 01st ( )/Lamp/Month
th
May, 2021 to 30 September, 2021 Type of Wattage
Burning Hours/day
through tariff-based Competitive Bidding Lamp (W)
4 hrs. 6 hrs. 12 hrs.
process. 35 10 15 29
HERC granted approval of the power procurement LED 70 19 29 58
110 30 47 91
petition of HPPC on 10th June, 2021 as follows:
TSERC directed the licensee
 Extension of the source of 50 MW Hydro Power from (TSNPDCL) to submit the revised PPA
the 450 MW Baglihar Stage-1 HEP for the next 10 negotiated with the petitioner (M/s
years w.e.f. 1st April, 2021 at the existing tariff and Gayatri Sugars Ltd.) on completion of the
terms and conditions. 10 years of the project from the
 Procurement of additional 100 MW gross power commercial operation date in so far as
round the clock from 450 MW Baglihar Stage-1 HEP 16.5 MW bagasse-based cogeneration project.
st
for a period of 10 years w.e.f. 1 July, 2021. WBERC approved the PPA executed on
th
 Procurement of 270 MW gross power from the 450 07 April, 2021 by and between DPL and
MW Baglihar Stage-2 HEP during the months of May WBSEDCL for purchase of the entire
to September for a period of 10 years, scheduled to quantum of power from Unit – VII and
begin in May 2022, at terms and conditions similar to Unit – VIII of DPL with effect from 1st
the procurement of 50 MW gross power currently January, 2019 up to the useful life of the
scheduled from the Generator JKSPDC. units at a tariff to be determined under Section 62 of the
HERC directed that the PPA between M/s Shiga Energy Electricity Act, 2003 in terms of regulation of the
Pvt. Ltd. and M/s Dans Energy Pvt. Ltd. with HPPC WBERC (Terms and Condition of Tariff) Regulations,
dated 11th September, 2020 under HERC (Conduct of 2011.

© CER, IIT Kanpur

17
 ERC Tracker
Regulatory Updates

Renewable Energy, the adoption of correct monthly Open Access billing

methodology for adjustment of Renewable Energy and
RPO and REC Captive Power under Open Access for the Period April
2016 to October 2018.
HERC carefully examined and
APERC has requested the Committee to
incorporated the comments and
submit its report on the implementation of
arguments made by the various stake
the must-run status granted to the M/s
holders regarding HERC (Rooftop Solar
Azure Power India Pvt Ltd.'s solar
Grid Interactive System Based on Net
projects, to refrain from curtailing the
Metering/Gross Metering) Regulations,
solar energy generated therefrom; and to
2021. The commission gave detailed guidelines for
compensate the unlawful and arbitrary curtailment of
constitution and functions of house rooftop solar
generation from the solar projects within two months th
monitoring mechanism on 25 June 2021.
from the date of holding its first meeting.
PSERC allows investment for installation
GERC orders that the time restriction for
st of solar plants on the roofs of control
executing PPAs be extended until 31
th rooms of various 400/220/132 KV Grid
May, 2021 rather than the 30 April, 2021
substations of PSTCL & SLDC buildings
for the projects covered in 'Small Scale
as Capital work in the MYT Control
Distributed Solar Projects, 2019' policy of
Period FY 2020-21 to 2022-23.
the Government of Gujarat as decided in
Petition No. 1954 of 2021. PSERC decided to impose a penalty of 25,000 on
GERC decided to approve the Short Term Power PepsiCo for non-compliance of RPO for FY 2015-16 and
Purchase from Adani Enterprises Limited for 50 MW FY 2016-17 during the respective years.
RTC power at 3.69/Unit (at GETCO periphery) for the The RERC in exercise of the power
st th
period 1 April, 2021 to 30 September, 2021 and 50 MW conferred under the regulation 19 and
RTC power at 3.69/Unit (at GETCO periphery) for the regulation 22 of the RERC DREGS
st st
period 1 October, 2021 to 31 March, 2022, as Regulations 2021 directs that the Rooftop
recommended by the Standing Committee of bid and Small Solar Grid Interactive Systems
evaluation. commissioned under Net Metering
th
agreements upto 15 September, 2021, shall continue to
KSERC has directed KSEB Ltd. to operate under the Net Metering arrangement till the
process and issue a feasibility report period of Connection Agreement, as per the provisions
within two weeks for the connectivity of of the Rajasthan Electricity Regulatory Commission
the 1 MW solar power plant being (Connectivity and Net Metering for Rooftop and Small
installed in the premises of M/s Kerala Solar Grid Interactive Systems) Regulations, 2015 and
Health Care Pvt. Ltd., according to the subsequent amendments thereof.
provisions of the KSERC (Renewable Energy and Net
Metering) Regulations, 2020. Further, there will be no UPERC decided to approve the extension
voltage-based restriction, and consumers/prosumers of the duration of PPA dated 8th
applying for net-metering up to 1 MW will be permitted November, 2006 for next 10 years from
to avail of this facility. January 2021 to December 2030, signed
between M/s SBEC bioenergy limited
MERC accorded its approval to procure and UPPCL.
400 MW of wind-solar hybrid power
from SECI for 25 years at the tariff of UPERC directed UPPCL to deposit a total amount of
2.41/unit discovered through competitive 72.45 billion in RPO Regulatory Fund. This include an
bidding plus its trading margin of 7 amount of 14.59 billion which is equivalent to the
paise/unit. The procured power shall be respective shortfall in RPO units until the FY 2020-21 at
considered for meeting solar and non-solar RPO the rate of 1/kWh and 57.85 billion against projected
requirements of Brihanmumbai Electric Supply and RPO requirements for FY 2021-22. The total amount of
Transport Undertaking. 72.45 billion can be paid in ten equal instalments. The
MERC directed MSEDCL to issue credit adjustments for RPO Regulatory fund would be used to procure
the months of September and October 2016 in the renewable energy, including hydropower.
following billing cycle if not done previously, regarding

© CER, IIT Kanpur

18
 ERC Tracker
Regulatory Updates

Others TNERC issued the following directives to Railways in

regards to Open Access operations:
 Railways must abide by the terms and conditions of
Under Regulation 21 (i) and Regulation 16 (vii) of the all the Rules and Regulations that apply to the
Power Market Regulations 2010, CERC granted the responses, as well as enter into an agreement with a
registration of Pranurja Solutions Limited (PSL) to clear commitment to all techno-commercial
establish and operate a power exchange. PSL is the third obligations for Open Access operation and single
power exchange in India after India Energy Exchange point scheduling to be considered.
(IEX) and Power Exchange India (PXIL).  Railways must transfer the whole contracted demand
APERC directed APSPDCL and APEPDCL to refund of all TSS points to TANGEDCO and
11,21,82,980 to M/s Spectrum Power Generation TANTRANSCO for their 110 kV Traction
Limited as the rebate amount availed from the monthly operations, as well as delink from TANGEDCO's
energy bills for the years 2016-17, 2017-18, 2018-19 and 33/22/11 KV LT network to operate as a Licensee.
2019-20 (till October 2019) along with applicable  Railways must pay 300 per kVA of contracted
interest till the date of payment in proportion to their demand at every TSS point and 11 per kWh of
respective liabilities within three months from today.
power from TANGEDCO for standby charges till
DERC imposes a penalty of 20,000/- ( 10,000/- for they surrender the surplus capacity.
each violation) in respect of violation of Regulation 32  All transmission, wheeling, and other fees must be
(8) (i), (ii) & (iii) and Regulation 61 (4) and (5) of SOP paid in accordance with OA regulations.
Regulations, 2017 to be paid by BRPL within 30 days of
the order.  Harmonic charges will be paid in compliance with the
Commission's regulations and orders.
HERC granted source approval to M/s Sneha Kinetic
th
Power Projects Private Ltd (96 MW) on 29 April, 2021, TNERC directed to TANGEDCO, to determine the
selected through competitive bidding under Expression applicability of an additional surcharge of 0.70/kWh,
th th
of Interest invited by the HPPC under Section 86 (1)(b) on six-monthly basis from 16 April, 2021 to 30
of the Electricity Act, 2003. September, 2021 directed under Regulation 24 (3) of the
TNERC Grid Connectivity and Intra State Open Access
MERC allowed to consider the additional capital and
Regulations. TANGEDCO would collect 15-minute
operation expenditure and other consequential impact on
block data on available capacity, power scheduled by
actual basis for reimbursement under Change in Law
TANGEDCO, and power scheduled by Open Access
subject to sensible review on the case of Sai Wardha
consumers (non-renewable and renewable energy) in
Power Generation Limited for in principle approval and
order to file the details when filing the petition for an
consequent compensation on account of Change in Law
additional surcharge. TANGEDCO must make every
event due to introduction of the Environment
effort to ensure maximum power availability in order to
(Protection) Amendment Rules, 2015 impacting
avoid paying stranded availability penalties.
revenues and cost of Petitioner during the operation
period. TSERC directed to transfer the case on 'seeking the
recovery of shortfall amounts from the licensee for the
PSERC approved the One Time Settlement (OTS)
energy supplied in October and November 2010' to the
scheme for a period of three months from the date of
CERC as the petition involves two DISCOMs of
Issuance of circular by the PSPCL on the same terms and
Telangana and two DISCOMs of Andhra Pradesh, and
conditions as already approved by the Commission vide
hence, the decision cannot be taken by only one
letter no. PSERC/Tariff/T-134/422 dated 22nd May, 2018.
Commission.
The OTS scheme shall be applicable to those consumers
whose defaults in payment/defaulting amount existed as TSERC directed to transfer the case on 'seeking the
on 31st December, 2020. recovery of 2,66,34,295 towards pending dues on
RERC suggested that there should be provision for cyber account of supply of electricity' to the CERC as the
security in the matter of RERC (Metering) Regulations, petition involves two DISCOMs of Telangana and two
2007 and amendments thereof and issue of RERC DISCOMs of Andhra Pradesh, and hence, the decision
(Metering) Practice Directions, 2021 as CEA (Metering cannot be taken by only one Commission.
Regulations) already have enabling provisions related to
cyber security. Therefore, Commission decided that
Metering Committee should issue “Code of Practice of
Metering” considering CEA (Metering Regulations).

© CER, IIT Kanpur

19
 ERC Tracker
Tariff Orders
Annual
State/Union Aggregate Revenue
Licensee/Utility True-up Performance Tariff
Territory (SERC) Requirement (ARR)
Review (APR)
Andaman & Nicobar
EDA&N - FY 20-21 FY 21-22 FY 21-22
(JERC)
Bihar (BERC) NBPDCL, SBPDCL FY 19-20 FY 20-21 FY 21-22 FY 21-22
TPL-D, TPL-G AIVPL, MUL,
Gujrat (GERC) DGVCL, MGVCL, PGVCL, FY 19-20 - FY 21-22 FY 21-22
UGVCL, GSECL, GETCO, SLDC
Himachal Pradesh FY 18-19 FY 19-20
HPSEBL - FY 21-22
(HPERC) FY 19-20 to FY 23-24
BESCOM, HESCOM, MESCOM,
Karnataka (KERC) GESCOM, HUKKERI, CESC, - FY 19-20 FY 21-22 FY 21-22
AEQUS, MSEZ, KPTCL
Lakshadweep (JERC) LED - FY 20-21 FY 21-22 FY 21-22
Manipur (JERC) MSPDCL, MSPCL FY 19-20 - FY 21-22 FY 21-22
Mizoram (JERC) PED FY 19-20 - FY 21-22 FY 21-22
FY 18-19
Puducherry (JERC) PPCL, PED FY 20-21 FY 21-22 FY 21-22
FY 19-20
FY 20-21
Punjab (PSERC) PSPCL, PSTCL FY 19-20 - FY 21-22
FY 21-22
Telengana (TSERC) TS Transco - - FY 19-20 to FY 23-24 -
UPPCL, PTCUL, UJVN, GIPL,
Uttarakhand (UERC) FY 19-20 FY 20-21 FY 21-22 -
SEPL, GBHPPL, SLDC
West Bengal (WBERC) WBSEDCL, DVC - FY 09-10 to FY 13-14 - -

Regulations
Date of
Title Approval/Notif cation
Renewable Energy (including RPO and REC)
HERC (Terms and Conditions for determination of Tariff from Renewable Energy Sources, Renewable
Purchase Obligation and Renewable Energy Certificate) Regulations, 2021 30thApril, 2021
Supply code
MERC (Electricity Supply Code and standards of performance of distribution licensees including power
quality) Regulations, 2021 26th June, 2021
Others
APERC (Licensees’ Standards of Performance) Regulation (3 rd Amendment), 2004 4th June, 2021
DERC (Schedule of Charges and the Procedure) (6th Amendment) Order, 2021 15th April, 2021
RERC (Consumer Grievance Redressal Forum, Electricity Ombudsman and Consumer Advocacy)
Regulations, 2021 5th April, 2021
TSERC (Deviation Settlement Mechanism and related matters) Regulation, 2021 16th June, 2021

We invite readers to register at CER's web portal to access CER's publications and resource material. This would also help us design
CER's activities and deliver a more relevant output by engaging with stakeholders. We also request your inputs on the newsletter and
the activities of the Centre.
Regulatory Insights Team

Disclaimer: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we
endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be
accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This
material has been funded by the Government of UK. However, the views expressed herein do not necessarily reflect the UK Government's official policies.

Other Initiatives Contact us:

Centre for Energy Regulation (CER)
Department of Industrial and Management Engineering
Indian Institute of Technology Kanpur, Kanpur-208016
Phone: +91 512 259 6181
eal.iitk.ac.in Email: [email protected] | Follow us on: cer.iitk.ac.in

Note: Additional information can be accessed through the hyperlinks provided in the online version of this newsletter.
20 © CER, IIT Kanpur