Andhra Pradesh continues to curtail renewable power, flouting court order

The Andhra Pradesh government continues to curtail renewable power in the state, despite a high court (HC) order to the contrary.

Close to 7,500 Mw of wind and solar power capacity is facing delayed payment and also curtailment in supply from the state since July. Industry executives contend the state is, at the same time, purchasing from the short-term power market and at high rates, of Rs 5 a unit and above. 

A senior executive in a wind power company alleged the curtailment is done verbally. And, especially during the peak supply period of wind power plants. 

A state through its power distribution companies (discoms) schedules supply at the regional load dispatch centre (RLDC). In any curtailing, a written application is to be given in advance. “There has been no formal notice from the state to the Southern RLDC or to the developers. The state informs the project developers verbally about the curtailment,” said a senior industry executive. 

Data accessed by Business Standard revealed the state is curtailing wind power during the evening peak supply hours (6 pm to 9 pm). Solar power developers say close to 70 per cent of segment capacity in the state is being curtailed, despite the must-run status given to renewable power. And, Andhra has been active in the short-term power market from last week. The state has purchased at rates Rs 2.8-5.5 a unit (kwh). The average wind power rate in the state is Rs 4.8 a unit; for solar, Rs 4.5 a unit.

In July, the new YSR Congress-led state government decided to review the rates of all renewable power projects awarded by the previous Chandrababu Naidu government. It also formed a High Level Negotiation Committee (HLNC) to "review, negotiate and bring down" rates of such projects, citing poor financial health of its discoms as the reason. 

As companies protested, the government curtailed purchases of renewable power. Project developers petitioned the HC of Andhra Pradesh, which ruled in favour of the companies. In an order dated September 24, the court dismissed the HLNC that was formed to review the rates for buying renewable power. It also said, “The respondents (state government) are directed not to take any coercive step of any nature, including curtailing production, stopping evacuation or the like, except after giving due notice to the generators.”

The court also asked the government to clear the dues of renewable power producers in Andhra. These were around Rs 2,500 crore at the end of July, according to the Union power ministry data. Project developers say they are yet to get any payment. 

In the Average Revenue Requirement filing for the year 2019-20, the Andhra discoms estimate a loss of Rs 9,415 crore. The stated revenue requirement is Rs 28,788 crore. Despite the revenue gap, the discoms did not apply for any customer rate hike. Additionally, a subsidy of Rs 7,064 crore was approved by the regulator for free electricity to agricultural consumers.

R K Singh, the Union minister for power and new and renewable energy, in his latest letter to the state, says discoms in Andhra are incurring an annual loss of Rs 1,563 crore and have failed to meet the target of reducing the cost-revenue gap to zero, as stipulated under the UDAY scheme. “At present, Andhra discoms are losing 39 paise for every unit of electricity procured. The discoms appear to be in a precarious position in terms of their current situation of operations and finances,” goes the letter.

This is the third letter from the Union ministry to the state, asking for intervention in the poor state of affairs on power supply and renewable power projects. Earlier, Singh had written for a review of state discoms, rather than blaming renewable power for the poor financial health.

Minister raps Andhra, TN and Jharkhand 

The Union minister for power and new and renewable energy, R K Singh, has written a critical letter to three states — Andhra Pradesh, Tamil Nadu and Jharkhand — on the poor performance of their power distribution companies (discoms) under the UDAY (Ujjwal Discom Assurance Yojana) scheme. 

Singh said review of power distribution reform schemes reveals the performance of these states’ discoms has deteriorated. The three state governments have been unable to bring down losses or improve the cost-revenue gap. Payables to power generators remains high. 

“Continuance of such a trend would have adverse impact on the state’s finances, besides causing stress in the power and banking sectors,” he has said, asking the states to intervene and make their discoms financially healthy.

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