Ministry of Power : Discoms Can Continue Or Leave PPA After Term Completion

The Ministry of Power has issued a letter enabling the Discoms to either continue or exit from the PPA (Power Purchase agreement) after completion of the term of the PPA i.e. beyond 25 years or a period specified in the PPA and allow flexibility to the Generators to sell power in any mode after State/Discom exit from PPA.

The new guidelines are based on the comments the power ministry received on the proposal of Discom’s existence in the PPA after the completion of the term. The guidelines comprise:

The first right to avail power from the Central Generating Stations will be continued to be with the Discoms with whom the PPA was signed.

Willing Discoms may surrender their share from eligible CGSs after the expiry of the term of the PPA i.e. on completion of 25 years from the date of commissioning of the plant or a period specified in the PPA. For that, the request may be submitted only after the approval of the State Commission who would ensure the capacity of power tied up with the discoms to meet the demand of electricity for all the consumers.

Discoms having Long-term PPAs with the Central Generating stations, which are due to expire soon can opt to abandon the entire allocated power from such eligible CGSs, by giving 6 months advance notice for their intention to abandon. And those who have already completed 25 years, also need to submit the request 6 months prior.

The power allocation, if any, made by the Central government to the State from that power station would be treated as withdrawn. Intimation to this effect will be required to be given by either the generating company or the State to the Ministry of power.

Discoms may also abandon the entire unallocated power from the CGSs and any share for CGSs, once relinquished by the discom, will not be allowed to be taken back by the discom under the same PPA conditions.

Also, for Nuclear Power Generating Stations, the mechanism of relinquishment of power after completion of the term of PPA shall be as decided by the Department of Atomic Energy as the tariff of Nuclear Power Generating Stations is determined by the Department of Atomic Energy on the recommendation of CEA.

The central generating stations, whose power gets abandoned by States, would be free to sell such relinquished power under the various avenues such as:-

a) Tie up with any other buyers desiring to go for long term PPAs or Medium-term PPAs (up to 5 years) or short term PPAs through a competitive bidding route.
b) Sell power in the power exchanges including Day-ahead, Real-time market, and Term-ahead markets, etc.
c) Get the power reallocated to the willing buyers, if any, as per the extant provisions of reallocation of power from CGSs.