TNERC Proposes Amendments To Renewable Energy Purchase Obligations Regulations In Tamil Nadu

Posted On - 5 August, 2024 • By - King Stubb & Kasiva

Introduction

The Tamil Nadu Electricity Regulatory Commission (TNERC) has proposed an amendment to its Renewable Energy Purchase Obligation (RPO) Regulations, 2023.[1] The draft amendment, published on June 26, 2024, seeks to revise the definition of ‘Pooled Cost of Power Purchase’ to address the issue of escalating conventional fuel costs, which have caused the pooled cost to exceed the preferential tariff set for renewable energy. The amendment aims to establish a reasonable pooled cost calculation by capping it at 75% of the preferential tariff rate fixed by the Commission for the respective year of commissioning of Non-Conventional Energy Sources (NCES) generators, under specific conditions.

Explanation (Key Points)

The proposed amendment is driven by several factors:

  1. Escalating Conventional Fuel Costs: The cost of power purchase from conventional sources has risen significantly, exceeding the preferential tariffs set for renewable energy. This has created a need to establish a fair and reasonable pooled cost calculation.
  2. Legal Precedents: The amendment aligns with legal interpretations and judgments from the Madras High Court and the Appellate Tribunal for Electricity (APTEL). These rulings have supported the implementation of a cap on the pooled cost when it surpasses the preferential tariff.
  3. Previous Commission Decisions: The TNERC has previously accepted the views of the APTEL in similar cases, further justifying the proposed amendment.

Key aspects of the amendment include:

  1. Revised Definition: The amendment modifies the definition of ‘Pooled Cost of Power Purchase’ to include a proviso that caps the pooled cost at 75% of the preferential tariff rate when the Average Pooled Cost of Power Purchase (APPC) of the Distribution Licensee exceeds the preferential rate fixed by the Commission for the corresponding year.
  2. Applicability: The cap on the pooled cost will be applied when the APPC exceeds the preferential tariff, ensuring that renewable energy generators are not unfairly disadvantaged due to rising conventional fuel costs.
  3. Implementation Date: The amendment will come into effect retroactively from the date of commencement of the Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligation) Regulations, 2023.

Conclusion

The proposed amendment to the TNERC’s RPO regulations is a significant step towards maintaining a balanced and sustainable energy market in Tamil Nadu. By addressing the issue of escalating conventional fuel costs and aligning with legal precedents, the amendment aims to ensure a fair and reasonable calculation of the pooled cost of power purchase. This will promote the growth of renewable energy sources and contribute to the state’s clean energy goals. The TNERC has invited comments and suggestions on the draft amendment until July 25, 2024, before finalizing the regulation.

[1] http://www.tnerc.gov.in//PressRelease/files/PR-260620240357Eng.pdf