Wind power producers can't be asked to put the clock back

Wind power producers, which have witnessed tariffs falling to record lows in recent months, have some reason to cheer, with the Andhra Pradesh electricity regulator disallowing any revision of contracted tariff rates.

Allowing the earlier tariff, the Andhra Pradesh Electricity Regulatory Commission (APERC) rapped the state’s power distribution companies for going back on power purchase agreements (PPAs). 

The regulator’s order, dated December 13, pertains to 41 wind power projects that signed PPAs with the two discoms in 2015 at Rs 4.76 a unit in the feed-in-tariff mode. After two years, when the wind tariff was discovered at Rs 3.46 a unit in the first-ever auction of wind power projects, the discoms went to the regulator, seeking a reduction in tariff, arguing they didn’t want to purchase “costly wind power”.

The order has come as a relief for companies operating in the state. Among these are Tata Power, ReNew Power, Sembcorp, Mythrah Energy, and Ostro Energy. All the projects were commissioned and supplying power to the discoms. Recently, the Karnataka Electricity Regulatory Commission also approved wind power at the earlier signed tariff of Rs 4.5 a unit, denying any changes to PPAs.     

Coming down heavily on the discoms, the APERC asked them to not enter into any PPA without intimating the regulator.

“Both the distribution companies in the state of Andhra Pradesh are hereby directed not to enter into any fresh power purchase agreements with any power developer using any source or fuel for power generation, without prior intimation to and permission from the Commission until further orders from the Commission, depending upon any change of circumstances or exigencies of the power sector in the state,” read the order.

The electricity regulator directed the discoms to honour PPAs and approach it for any specific change to the cost structure, if need arose.

“These wind-power generating plants with agreed dates of commercial operation and injecting power into the grid being received by the two distribution companies in the state of Andhra Pradesh may not be justifiably asked to put the clock back, more so, when the establishment of these generating units was actuated by the wind power policy of the state government and the regulation by the state commission,” according to the order.

It further added that the terms and conditions incorporated in PPAs shall be subjected to any modification in the manner provided by PPAs themselves.

“Where the interests of the public or consumers or, for that matter, any stakeholders are involved, it is open to the Commission to revisit the terms and conditions of the PPAs, including determination of the tariff in the manner provided by the PPAs and permitted by the provisions and principles of law,” it said.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel