Projects, Energy & Infrastructure Monthly Newsletter | August 2024

Amendment in Guideline for Import/Export (Cross Border) of Electricity, 2018

• The Ministry of Power (MoP) has issued an amendment to the "Guidelines for Import/Export (Cross Border) of Electricity, 2018" (IECBE Guidelines-2018). This amendment, dated August 12, 2024, introduces specific modifications to clauses 5.2(a) and 8.9, which govern the export of electricity from India to neighbouring countries and the construction of dedicated transmission lines for cross-border electricity trade.
• Indian Generating Companies/Distribution Companies can export electricity generated from coal, renewable energy, or hydropower to entities in neighbouring countries, either directly or through Indian trading licensees.
• For Coal-based Electricity, export is allowed only if the electricity is generated using imported coal, spot e-auction coal, coal from commercial mining, or other sources specified by the Government of India. Restrictions do not apply to collective transactions through Power Exchanges in India. For Gas-based Electricity, export is allowed if the electricity is generated using imported gas or other government-specified sources.
• Indian Generating Stations that supply electricity exclusively to a neighbouring country can build dedicated transmission lines to connect with the neighbouring country's transmission system. The construction requires approval from the Designated Authority and must align with the provisions of the Electricity Act, 2003.
• The Government of India may permit the connection of such generating stations to the Indian grid to facilitate domestic power sales if there is sustained non-scheduling of capacity or if there is a payment default under the Power Purchase Agreement (PPA).

Draft Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants

• On August 22, 2024, Ministry of Power (MoP) has issued “Draft Tariff based competitive bidding guidelines for procurement of storage/stored energy from Pumped Storage Plants” (Draft Guidelines) with request to provide comments within 15 days from the date of issuance of the letter.
• The Draft Guidelines, issued under Section 63 of the Electricity Act, 2003, are designed with the objective of establishing a separate framework for procurement capacity or energy from Pumped Storage Projects (PSPs). These projects play a crucial role in ensuring grid stability, reliability, and costeffective energy storage, particularly in integrating renewable energy sources.
• The provisions of the Draft Guidelines are applicable to Developers and Procurers (End Procurers or Intermediary Procurers) for procurement of capacity or energy from existing, under-construction or new PSP Projects. and are aimed at standardizing competitive bidding process, ensuring transparency, fairness, and efficiency.
• The draft Guidelines aim to streamline the process of procuring power from pumped storage projects through competitive bidding. By providing a clear framework, these Guidelines seek to attract investments, promote transparency, and ensure the cost-effective integration of renewable energy into the grid. The Draft Guidelines also emphasize the importance of stakeholder collaboration and adherence to timelines to achieve the desired outcomes.

Delhi Electricity Regulatory Commission (Guidelines for establishment of the Forum and the Ombudsman for redressal of grievances of Electricity Consumers) Regulations, 2024

In exercise of the powers conferred on it by sub-section (2)(r) and sub-section (2)(s) of Section 181 read with sub-sections (5), (6) and (7) of Section 42 of the Electricity Act 2003, and all other powers enabling it in this behalf, and after previous publication, the Delhi Electricity Regulatory Commission hereby frames the "Guidelines for establishment of the Forum and the Ombudsman for redressal of grievances of Electricity Consumers) Regulations, 2024:

• Each distribution licensee must establish a Consumer Grievance Redressal Forum (CGRF) to address complaints from consumers. These forums are expected to be accessible and capable of resolving disputes efficiently.
• The forums should be composed of qualified members, including a retired judge or a person of similar qualification, to ensure fair and impartial decision-making.
• The Ombudsman is appointed to handle unresolved grievances escalated from the CGRF. The Ombudsman must ensure that all disputes are handled within the prescribed timelines and that consumers receive fair treatment.
• The Ombudsman has the authority to direct the licensee to take specific actions to resolve complaints and can also award compensation to consumers in case of deficiencies in service.
• The guidelines emphasize the need for transparency and easy accessibility to the redressal mechanisms. Consumers should be well-informed about their rights and the procedures to file complaints.
• The forums and Ombudsman are required to maintain records of all complaints and their resolutions, which should be made available to the public to ensure transparency.
• The CGRF and Ombudsman are required to resolve complaints within a specific time frame, ensuring that consumers do not face prolonged issues with their electricity services. This time-bound approach is designed to enhance consumer satisfaction and trust in the system.

Suo Motu Order dated 25.07.2024 passed by the Rajasthan Electricity Regulatory Commission (RERC) notifying the RERC (Grid Interactive Distributed Renewable Energy Generating Systems) (Second Amendment) Regulations, 2024

• RERC has issued the suo motu order notifying the Grid Interactive Distributed Renewable Energy Generating Systems) (Second Amendment) Regulations, 2024.
• One of the major amendments is in Regulation 12. The new provision specifically addresses educational institutions recognized by the Government of India or the Government of Rajasthan. These institutions, which have opted for a Net-Metering arrangement, are now allowed to switch to Net Billing for any two months within a financial year. This flexibility is designed to accommodate the operational schedules of educational institutions, which often have predetermined vacation periods where power consumption is significantly reduced. By allowing these institutions to opt for Net Billing during these low consumption periods, the RERC is providing a mechanism to balance their energy usage more effectively with their billing arrangements .
• Another significant amendment is in Regulation 8, which impacts the installation and technical feasibility study process for renewable energy generating systems. The revised sub-regulation 8.8 stipulates that the technical feasibility study for installing such systems must be completed within fifteen days. If the outcome is not communicated to the applicant within this period, the proposal will be considered technically feasible by default. This change aims to expedite the approval process and reduce delays that applicants previously faced.
• Another aspect that is worth appreciating is that the applications for renewable energy generating systems up to a capacity of 10 kW, which are complete in all respects, are now deemed accepted without the need for a technical feasibility study.

Fortum Solar Plus Pvt. Ltd. Vs Rajasthan Electricity Regulatory Commission & Ors. And Batch.

Background facts

• The Ministry of Finance issued Safeguard Duty (SGD) Notifications in 2018 and 2020, imposing duties on import of solar modules and cells from countries like China, Malaysia, Vietnam etc. to protect the domestic industries. Pertinently, the concerned Solar Power Developers planned the development of projects in a way that no liability of SGD would attract towards the development of their respective projects. The important issue before the APTEL was that whether the introduction of the SGD notifications would be tantamount to a “Change in Law” event and whether the solar power developers are entitled to seek consequential relief thereof.
• Solar developers in Rajasthan Appeal's, contended that they didn't factor in the liability of SGD in their bid expecting no SGD after July 2020 and the imposition of the SGD 2020 affected the cost of the development of the Project as the Solar Power Developers had to incur additional liability.
• The Solar Power Developers involved in the Andhra Pradesh batch contended that while the State Commission acknowledged that the imposition of SGDs as a change in law in Law event but denied the consequential relief to the Developers as the Developer did not submitted their details of their workings at the time of submission of their bids.
• BSES Rajdhani Power Limited (BRPL) also challenged the Central Commission's order wherein the Central Commission recognized that the imposition of SGD as a "Change in Law” and also granted consequential relief to the Solar Power Developer.

Issues at Hand

• Whether the imposition of SGD on import of solar modules and cells from countries like China, Malaysia, Vietnam etc by way of 2018 and 2020 SGD Notifications constitutes as a Chane in Law event or not?
• If yes, whether the Solar Power Developers are entitled for compensation was warranted under the PPAs?

Decision of the Tribunal

• SGD Notification 2018 was valid from 30.07.2018 to 29.07.2020, imposing varying safeguard duties and SGD Notification 2020 extended duties from 30.07.2020 to 29.07.2021, with different rates and applicability to new countries.
• The APTEL has resorted to the literal construction of the Act and Rules etc., and no implied terms has been read into the provisions of the agreement between the parties.
• Customs Tariff Act 1975, Section 8B (8) allows for safeguard duties to last up to ten years with extensions. The initial safeguard duty period can be less than four years, with extensions if necessary.
• The issuance of SGD Notifications constitutes as a “change in law” event under the terms of the PPA & RfS.
• Imposition of SGD duty was considered as a "Change in Law" event and entitled the Solar Power Developers to seek appropriate relief in line with their respective PPAs. Therefore, the Solar Power Developers were entitled to claim financial relief under the "Change in Law" provisions of their respective PPAs.
• APTEL has remanded the matters to the respective State Commissions to determine the financial relief, including carrying costs, to the Solar Power Developers.

"HSA
Viewpoint

With the passing of the judgement, APTEL has strengthened the regulatory certainty in relation to fundamental contractual provisions like change in law under and its treatment. More importantly, APTEL by way of this judgement has clarified that bids under Section 63 of the Electricity Act, 2003, cannot be subjected to scrutiny of the regulator. In fact, what goes into the formulation of bid is not open for the regulator to interfere.

Central Transmission Utility of India Limited vs Solarone Energy Private Limited.

Background facts

• Central Transmission Utility of India Limited (CTUIL) filed Petitions under Regulation 111-113 of the CERC (Conduct of Business) Regulations, 1999, seeking directions on the issue of change in the source of the renewable energy generating stations for the purpose of grant of connectivity under the General Network Access Regulations (GNA Regulations).
• CERC vide its order in Petitions No. 291/MP/2023 and 292/MP/2023 disposed of the Petitions filed by SolarOne Energy Private Limited (SolarOne). SolarOne was directed to submit the necessary land documents or provide a Land Bank Guarantee (BG) within two weeks, as per Regulation 5.8(xi) of the GNA Regulations, to convert the 300 MW connectivity at Gadag and Koppal from the LoA route to the Land or Land BG route.
• CTUIL under the present case sought directions to ensure compliance with GNA Regulations. CTUIL contended that SolarOne's land documents reflected a hybrid (wind-solar) project configuration, which it could not recognize under the current solar connectivity framework. CTUIL further contended that SolarOne did not meet the criteria to be considered a "connectivity grantee" under the new regulations, necessitating further compliance.
• SolarOne however, claimed that it qualifies as a "connectivity grantee" and alleged that CTUIL has selectively applied regulations and caused delays in operationalising/ using the connectivity freely. SolarOne further contended that they had informed CTUIL about the shift to a wind-solar hybrid project, which it initially did not object to.
• CTUIL submitted that SolarOne had not fulfilled the necessary conditions to be recognized as a connectivity grantee. CTUIL also submitted that it is facing difficulties in complying with the directions of CERC's order dated 21.04.2024 and sought directions from CERC to direct SolarOne to comply with specific directives to qualify as a connectivity grantee.
• SolarOne argued that it had complied with the directions of CERC's Order dated 21.04.2024 and CTUIL's actions were unwarranted in seeking to enforce additional conditions beyond the requirements stipulated by CERC.

Issues at hand

• Whether SolarOne should be recognized as a "connectivity grantee" under the GNA Regulations, given their shift from a solar to a wind-solar hybrid project?

Decision of the Tribunal

• CERC emphasized that any change in the project configuration, such as shifting from solar-only to hybrid, is not an automatic process. A specific approval from CTUIL is mandatory. The process involves technical studies to ensure compliance with the Central Electricity Authority's Technical Standards for Connectivity. SolarOne's assertion that the change in configuration was recognized by CERC in its earlier order dated 21.04.2024 was rejected, as the necessary approval from CTUIL was not obtained.
• Considering the case specific facts, and exercising its power to relax and remove difficulty, CERC extended the time for compliance by two weeks and allowed SolarOne to transition first and then seek change in configuration from CTUIL.

"HSA
Viewpoint

While CERC has opined that in case of transition entity, the change in configuration of the project from Solar to Solar Wind Hybrid can only occur once the transition process is concluded by CTUIL, however, it is our view that CERC did not appreciated the case specific facts demonstrating delay caused by CTUIL in concluding the transition process and there by making the present order amenable to challenge before APTEL..

New Delhi Municipal Council (NDMC)

Background facts

• The NDMC is responsible for the distribution of electricity in the New Delhi Municipal area, under the New Delhi Municipal Council Act, 1994, and is required to provide uninterrupted power supply as per the Electricity Act, 2003.
• NDMC sought permission to levy and recover PPAC from consumers, which was computed at 62.76% for the quarter. The NDMC initially proposed levying 38.75% on consumer bills for three months (October to December 2023), but the final calculation brought the PPAC to 65.27%.
• The Delhi Electricity Regulatory Commission (DERC) conducted a prudence check and found that NDMC included power from sources like the Tehkhand Waste to Electricity Project Limited (TWEPL), which was not part of the base cost approved in the Tariff Order of 2021. Despite these considerations, DERC approved a PPAC of 30.00% to be levied until December 2024, with the surplus or deficit to be addressed during the true-up of the financial year.

Issues at hand

• Whether the New Delhi Municipal Council (NDMC) can levy a Power Purchase Adjustment Cost (PPAC) of 38.75% and claim a PPAC of 24.01% for the period from October 2023 to December 2023, and if so, whether the calculated PPAC of 62.76% should be adjusted

Decision of the Tribunal

• NDMC was allowed to levy a PPAC of 30% until 30.09.2024. The Commission found that the PPAC claimed by NDMC exceeded the prudent level due to high gas prices and other factors.

"HSA
Viewpoint

The Commission approved the continuation of a PPAC of 30% for the period from 01.10.2024 to 31.12.2024. The differential PPAC for Q3 FY 2023-24 will be addressed in the True-up process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.