Punjab State Electricity Regulatory Commission Announces 4th Draft Amendment to Tariff Regulations 2024
Introduction
The Punjab State Electricity Regulatory Commission (PSERC) has recently proposed the 4th draft amendment to the “Punjab State Electricity Regulatory Commission (Terms and Conditions for Determination of Generation, Transmission, Wheeling and Retail Supply Tariff) Regulations, 2022.”[1] This amendment aims to address various aspects of power generation, transmission, and distribution in the state.
Key Points of the 4th Draft Amendment
- Focus on Emission Control Systems (ECS): The amendments introduce new definitions and regulations related to Emission Control Systems (ECS). This reflects a growing emphasis on cleaner power generation.
- Depreciation rules are established for ECS in existing and new generating stations.
- The maximum allowable Operation & Maintenance (O&M) expenses for ECS are capped at 2% of the admitted capital expenditure.
- Changes in Return on Equity and Interest Calculations:
- A ceiling of 14% is introduced for the return on equity on additional capitalization due to changes in law (including those related to Emission Control Systems).
- The method for calculating interest on loan capital is revised, using the State Bank of India’s MCLR as the base rate.
- Revised Working Capital Norms: The amendments propose reducing the working capital cycle for various activities from 60 days to 30 days and from 2 months to 45 days.
- Performance Parameter Update: The definition of “specific oil consumption” is broadened to include “specific oil/ water/reagent consumption,” reflecting the use of various resources in power generation.
- Other Amendments: The amendments also include revisions to billing and payment procedures, late payment surcharges, and interest on working capital calculations.
Overall Impact of the Amendments
The 4th draft amendment to the tariff regulations is expected to have several implications for the power sector in Punjab. It is likely to incentivize investment in cleaner technologies and reduce the financial burden on generating companies. The revised working capital norms may also improve the efficiency of the power sector’s operations.
The final amendments will depend on public feedback and the Commission’s final decision. Interested stakeholders can submit their comments and suggestions during the public consultation process.
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