MERC Gives Captive Power Producers Until March 2021 to Fulfill RPO Obligations

In a further concession to Captive Power producers (CPP)in the state, the Maharashtra Electricity Regulatory Commission has allowed fossil fuel-based captive power producers and Open Access consumers until March 2021 to fulfill their renewable purchase obligations (RPO).

Taking into account the massive impact of the Covid lockdown on industries in the state and their markets everywhere, the commission also allowed the power producers the option of giving Bank Guarantee, instead of depositing the RPO shortfall amount to MEDA. This was also done keeping in mind that a writ petition challenging the RPO applicability to captive power producers is still before the state high court.

An interesting clarification that was forced upon the MERC was the need to specify the calculation of the amounts. The CERC, while specifying the REC (Renewable Energy Certificate) prices in an earlier order, had set a floor price of zero, and Rs 1 per Kwh, which meant that industries could actually pay nothing, by alluding to the zero floor price. The MERC noted that the CERC order is presently stayed by the Hon’ble Appellate Tribunal for Electricity (APTEL). But to get around the anomalous situation of nil floor price of RECs, the commission clarified that in case of REC floor prices is stipulated as zero, then  CPP Users have to deposit the amount at the rate of the average of floor and forbearance price of RECs.

The CPPA had earlier filed a Petition in 2019 seeking rollover of its RPO for  FY 2016-17, FY 2017-18, and FY 2018-19 to FY 2019-20. In that proceeding, the Commission noted that CPPA had filed a Writ Petition before the Hon’ble Bombay High Court seeking RPO exemption for Captive users of Fossil fuel-based Co-generation plants.

Thus, from March 2020, the CPPA effectively has another year’s extension thanks to Covid and ambiguously framed rules, something that will probably not please renewable energy producers in the state at all. More importantly, there seems every chance that captive power producers in other states will be citing these orders to defer their own compliance with the new rules notified on RPO obligations.