Rajasthan Electricity Regulatory Commission (RERC) Denies Tariff Adoption for 900 MW Solar Power Project by Coal India Limited

Posted On - 3 June, 2024 • By - King Stubb & Kasiva

Summary:

The Rajasthan Electricity Regulatory Commission (RERC) dismissed a petition by Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (RVUNL) seeking tariff adoption for a 900 MW solar power project to be installed by Coal India Limited (CIL).[1] The Commission ruled that the procurement process proposed by RVUNL, which aimed to replicate terms and conditions from an earlier 810 MW project, did not adhere to the requirements of the Electricity Act, 2003, Tariff Policy, and government guidelines.

Case Timeline:

  • 13.10.2022: RVUNL entered into an MoU with CIL for the solar project.
  • 07.09.2023: CIL agreed to supply power at Rs. 2.64 per kWh based on the MoU.
  • 18.09.2023: RVUNL board approved the procurement.
  • 26.09.2023: RVUNL sought approval from the Ministry of Power (MoP).
  • 26.10.2023: MoP granted approval and directed RVUNL to approach RERC for tariff adoption.
  • 03.04.2024 and 30.04.2024: RERC hearings on the petition.
  • 15.05.2024: RERC issued its order denying the petition.

Issue Raised:

The central issue was whether the proposed tariff adoption for the 900 MW solar project, based on terms from a previous 810 MW project, complied with legal and regulatory requirements for competitive bidding.

Appellant’s Arguments (RVUNL):

  • RVUNL argued that the proposed tariff of Rs. 2.64 per kWh was the same as the one discovered through a tariff-based competitive bidding process for the earlier 810 MW project.
  • They contended that the project aligned with the government’s scheme for flexibility in generation and scheduling of power, allowing bundling of renewable energy with thermal or hydro power.
  • RVUNL also stated that the Ministry of Power had approved the procurement and directed them to approach RERC for tariff adoption.

Respondent’s Arguments (Discoms):

  • The respondents, mainly distribution companies (Discoms), requested the Commission to ensure compliance with rates, terms, and conditions from the 810 MW project before adopting the tariff.
  • They also asked for a clear methodology for energy accounting and sharing of financial gains resulting from the project.

Order:

The RERC denied the petition, highlighting that RVUNL’s proposed process violated the Electricity Act, 2003, Tariff Policy, and government guidelines. The Commission emphasized the need for a transparent competitive bidding process for power procurement, which was not followed in this case.

Analysis:

The RERC’s decision underscores the importance of adhering to competitive bidding processes in power procurement to ensure transparency and fairness. The Commission’s emphasis on compliance with legal and regulatory frameworks reinforces the need for due diligence in energy sector transactions. The case also highlights the intricacies of incorporating renewable energy sources into the power grid and the regulatory challenges that may arise in such endeavours.

[1] https://solarquarter.com/wp-content/uploads/2024/05/Petition-for-adoption-of-Tariff-for-900-MW-Solar-Power-Project.pdf