CERC Grants No Relief To ACME Over GNA Transition Payment

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The Central Electricity Regulatory Commission (CERC), in its latest order has refrained from giving ACME Solar Holdings Private Limited (ASHPL) any relief from the payment of bank guarantee. The payment was mandated due to its transition to General Network Access (GNA) as per the newly introduced CERC (Connectivity and General Network Access to the Inter-State Transmission System) Regulations, 2022.

ACME had constituted a Special Purpose Vehicle (SPV)-ACME Heergarh Powertech Pvt Ltd. to develop a 300 MW solar power project in Rajasthan. It signed a Power Purchase Agreement (PPA) with the Maharashtra State Electricity Distribution Company Limited (MSEDCL) on August 21, 2019. 

It also signed a contract for connectivity with the PGCIL on September 21, 2021. It has submitted a connectivity bank guarantee (BG) of Rs 5 crore, which was later replaced with a BG of Rs 3 crore (conn BG-2) with Rs 50 lakh as Conn BG-1. Later, both the securities were returned to ACME after commissioning of the project. 

It also pleaded for Long Term Access (LTA) of 300 MW with CTUIL in 2021. ACME commissioned the 300 MW capacity of the project on May 25, 2022. It started scheduling power under Short-Term Open Access (STOA) as LTA was not ready by the CTU. It also applied for Medium Term Open Access (MTOA). However, due to a lack of connectivity from the transmission service providers, ACME continued to confine itself to STOA, facing additional charges like charges for DSM. 

ACME, in its petition before the CERC, said that on July 7, 2022, GNA norms were issued surpassing the CERC (Grant of Connectivity, Long Term Access and Medium-Term Open Access in inter-State Transmission and Related matters) Regulations, 2009. 

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As per the new GNA norms, in case an entity chooses to convert its LTA from the Regulations 2009 to the GNA Regulations, the Construction Bank Guarantee already furnished should be treated as Conn-BG1 for Rs. 50 lakhs and the balance as Conn BG-2 under these Regulations. 

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“In case no Construction Bank Guarantee has been furnished, then the entity would furnish Conn BG-1 for 50 lakhs and Conn-BG3 at Rs. 2 lakhs per MW corresponding to such LTA quantum within two months of exercising the said option. Further, any Conn BG-2 furnished under the Connectivity Regulations, 2009, would be treated as Conn-BG2 under the GNA Regulations,” the order detailing the issue said. 

ACME, in its petition, asked the CERC to relax the norms of GNA to refrain from the payment as the solar developer had already commissioned its project and the delay was due to the respondents in the case like CTUIL. The CERC, however declined to give any relief to the company and asked it to abide by the new norms. 

The CER order said, “, “When viewed in the light of the observations of the Hon’ble Supreme Court in the referred cases, the conditions specified by the Commission under the GNA Regulations cannot be categorized as unreasonable so as to justify the need for resorting to the exercise of general power of relaxation. The power of relaxation is exercisable in exceptional circumstances on a case-to-case basis.”

It also added, “We observe that the submission requirement of Conn-BGs as per Regulations 37.3 and 37.4 of the GNA Regulations is linked to the effectiveness of LTA or MTOA and not COD of the generation project. In view of this fact, we are not inclined to consider the Petitioner’s request for non-submission of Conn-BGs. We also do not agree with the Petitioner’s contention that Conn-BGs are only required till COD of the project. As per the GNA regulations, Conn-BG2 and Conn-BG3 are to be returned in five equal parts over five years after COD, and subsisting ConnBG2 or Conn-BG3 is encashed in case a generating station relinquishes its connectivity at any point after COD. Hence, Petitioner is also required to submit Conn-BGs as per the provisions of the GNA Regulations.”