The Ministry of Power published the Draft Electricity (Change in Law, Must-run status, and other matters) Rules 2020 on the 1st October 2020 and the Draft Electricity (Late Payment Surcharge) Rules, 2020 on 8th October, 2020 seeking public comments.
In this context, Prayas (Energy Group)’s (PEG) comments and suggestions on the draft rules are detailed in the attachment below.
- It is unclear whether the Central Government has the jurisdiction to implement rules under the EA, 2003 on these substantive issues. The statutory advice from the CERC to the MoP on these rules opines that the ERCs have jurisdiction in these matters and clearly advise the MoP ‘not to proceed with the framing of rules on these subjects’. Similarly, under Section 180 (o) states could also have jurisdiction on the matter. With the notification of such rules, MoP could initiate a jurisdictional battle which could impede progress in the sector.
- To avoid further litigation and respect the letter and spirit of the Electricity Act, 2003 and the concurrent nature of the subject, we feel that 'change in law' and 'late payment surcharge' should be dealt with as per existing PPAs/SBDs and regulatory framework and the proposed rules should be withdrawn.
- The proposed approach for 'Change in Law' is heavily lop-sided in favour of the Generators and is not balanced with regard the risk and reward sharing. Further, since the Commission approval is required in any case, any payment should only take place after the due process has been completed.
- The proposed rules (4(1) and 4(2) do not seem to be in congruence. If backing down can happen only due to grid security or technical constraints, then surely that said RE generation should not take place for system security. Hence the question of selling such un-scheduled generation in the Power Exchange cannot arise, for if it were safe to generate and inject the said RE power into the grid, then there would be no grid security issue and the procurer would be obliged to buy the same. Therefore 4(2) would only dilute the implementation of the must-run status for wind and solar power plants and hence should not be taken forward.