M.P. Electricity Regulatory Commission

Transcription

1 M.P. Electricity Regulatory Commission Approach paper on Fixation of norms for determination of tariff for procurement of power from Small Hydro Power Projects (SMP- 18 /2018)

2 LEGISLATIVE PROVISIONS 1.1 Section 86(1) (e) of the Electricity Act 2003, mandates the State Electricity Regulatory Commissions to promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person. The Regulatory Commissions are also required to specify, for the purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution Licensee. Further the Act, under Section 62, empowers the Commissions to determine the tariff for the supply of electricity by a generating company to a distribution Licensee in accordance with the provisions of the Act. Also, Section 61 provides that the Commissions specify the terms and conditions for the determination of tariff and, in so doing, be guided by the principles listed in Clauses (a) to (i) of that Section. 1.2 The clauses 6.4 (2) and (3) of the Tariff Policy issued on provide as under: (2) States shall endeavor to procure power from renewable energy sources through competitive bidding to keep the tariff low, except from waste to energy plants. Procurement of power by Distribution Licensee from renewable energy sources from projects above the notified capacity, shall be done through competitive bidding process, from the date to be notified by the Central Government. However, till such notification, any such procurement of power from renewable energy sources projects, may be done under Section 62 of the Electricity Act, While determining the tariff from such sources, the Appropriate Commission shall take into account the solar radiation and wind intensity which may differ from area to area to ensure that the benefits are passed on to the consumers. (3) The Central Commission should lay down guidelines for pricing intermittent power, especially from renewable energy sources, where such procurement is not through competitive bidding. The tariff stipulated by CERC shall act as a ceiling for that category. 1.3 The Central Electricity Regulatory Commission has issued revised norms w.e.f through Central Electricity Regulatory Commission (terms and conditions for Tariff determination from renewable energy sources) Regulations, 2017 notified on dated specifying the norms for various non-conventional sources of energy including power from small hydro power projects (with a station capacity up to and including 25 MW). The CERC also issued an order on determining the levelized tariff based on the norms specified under Regulations, The Commission has also issued Madhya Pradesh Electricity Regulatory Commission (Terms and conditions for Tariff determination of energy from renewable energy sources) Regulations, 2017 notified on specifying the norms for various non-conventional sources of energy including power from small hydro power projects. MPERC Page 1

3 1.5 In exercise of the powers vested under Section 86(1)(a), (b) and (c) read with (e), and Section 62(1) of the Electricity Act, 2003 (EA, 2003) and all other powers enabling it in this behalf, Madhya Pradesh Electricity Regulatory Commission (Commission), through this paper, proposes to fix norms for determination of tariff and related dispensation for the purchase of power by Distribution Licensees from small hydro power projects in the state. 1. PROCEDURAL HISTORY (a) (b) (c) Earlier, the Commission had issued a tariff order for procurement of power from small hydro power projects on The control period expired on and the same was extended until issue of new tariff order. On , Central Electricity Regulatory Commission (CERC) had issued revised regulations on terms and conditions for determination of tariff from new and renewable sources of energy. Accordingly, the Commission has considered the guidelines issued by CERC and revised the existing norms for determination of tariff for procurement of power from small hydro power projects and issue the tariff order on The control period expired on , which was extended from time to time until REGULATORY PROCESS FOR NEXT CONTROL PERIOD The Commission, through this approach paper invites comments/suggestions from various stakeholders and shall hold a public hearing, if necessary, at the Commission s Office. After analyzing the comments, the tariff shall be determined for the next control period. 3. APPLICABILITY OF THE ORDER The tariff order based on revised norms shall be applicable to all small hydro power projects in Madhya Pradesh commissioned on or after the date of issue of new tariff order for sale of electricity to the distribution licensees within the state. 4. TARIFF REVIEW PERIOD/CONTROL PERIOD The control period shall start from the date of issue of new tariff order and will close at the end of FY i.e The tariff decided in this control period shall remain in effect for the whole project life of 35 years from the date of commissioning. 5. MECHANISM FOR TARIFF DETERMINATION In its earlier order, the Commission had adopted a year wise tariff approach. The Commission shall continue to adopt the same to determine tariff for such projects. MPERC Page 2

4 6. TARIFF DESIGN Key elements of norms The following is the comparison among the norms as specified by CERC, Commission s tariff order dated and the revised norms proposed by the Commission: CERC order dated under Regulations dated MPERC Order dated Proposed Revised Norms as per Regulations dated Less than 5 MW to Less than 5 MW 5 MW to 25 MW Less than 5 5 MW to 25 MW MW 5 MW Capital Cost 779 without 707 without (Rs.lakhs/ indexation indexation without without without MW) (inclusive of (inclusive of indexation( indexation( indexation power power inclusive of inclusive of (inclusive evacuation cost) evacuation cost) power power of power evacuation evacuation evacuation cost) cost) cost) Plant Life (years) CUF (%) MW 635 without indexation (inclusive of power evacuation cost) Return on Equity O&M Expenses Interest on working Capital Interest on Debt 20% Pre Tax First 10 Yrs. 24% Pre Tax 11 th Yr. Onwards 29 Lacs/MW for 21 Lacs/MW for first year with a first year with a simple escalation simple escalation of 5.72% per of 5.72% per annum annum Average SBI Base rate plus 300 basis point on (A) O&M expenses for one month (B) Receivables equivalent to 2 (Two) months of energy charges on sale of electricity calculated on the normative CUF. (C) Maintenance 15% of operation & maintenance expenses. It works out to 10.97%. Average Base rate of SBI basis points. It works out to 9.97 % 20 % Pre Tax 20% Pre Tax 3% of the capital cost in the first year and thereafter a simple escalation of 5.72% per year 13.5 % on (A) O& M expenses for one month (B) Receivables equivalent to 2 (Two) months of energy charges on sale of electricity calculated on the normative CUF. (C) Maintenance 15% of O&M expenses. 3% of the capital cost in the first year and thereafter a simple escalation of 5.72% per year 11 % on (A) O& M expenses for one month (B) Receivables equivalent to 2 (Two) months of energy charges on sale of electricity calculated on the normative CUF. (C) Maintenance 15% of O&M expenses. 13% 10 % MPERC Page 3

5 Debt-equity ratio 70:30 70:30 70:30 Discounting factor (%) 9.15 Year to year tariff was determined Year to year tariff was determined Depreciation Auxiliary consumption (%) Free power to the state (%) 5.83% per annum for first 12 years and 0.87 % from 13 th year onwards 7% per annum for first 10 years and balance is spread over the remaining useful life of Plant from 11 th year onwards 7% per annum for first 10 years and balance is spread over the remaining useful life of Plant from 11 th year onwards % with of 3 years (a) upto 10 MW -8% with (b) more than 10 MW & up to 25 MW - 10% with 5% with of a block from COD. (a) upto 10 MW - 8% with (b) more than 10 MW & up to 25 MW -10% with 7. OTHER TERMS AND CONDITIONS a) Tariff determined shall be exclusive of taxes/duties as may be levied by the State Government. b) Tariff shall be firm for the project life and will not vary with fluctuations in exchange rate. c) The wheeling charges and Reactive energy charges would also be payable. d) The plant would be entitled to draw power from the distribution licensee s network during start-up/shutdown period of its plant or during such other emergencies. The supply availed would be accounted/billed as decided by the Commission for Renewable Energy from time to time. MPERC Page 4

6 e) Banking shall be applicable as per the provisions of MPERC (Cogeneration and generation of electricity from renewable sources of energy) (Revision-I) Regulations, 2010 as amended. f) CDM benefits shall be allowed as decided by the Commission. g) Other provisions of the Policy for implementation of small hydel-power based electricity projects in Madhya Pradesh, 2011 as amended shall apply. MPERC Page 5