Ministry of Power Notifications for Change in Law, Curtailment of ‘Must Run’ Plants Welcome

In two separate notifications, the Ministry of Power has issued notifications for both compensation in case of a change in law event, and for curtailment of power from Must Run power plants. The rules will have significant impact for renewable energy producers, thanks to the must run status they enjoy, besides the many disputes linked to change in aw event.

In case of curtailment of power, buyers will have to compensate at the rates specified in the PPA, and generators, once the day ahead market has started (It started yesterday), will be allowed to sell scheduled power at the exchanges. All deficits have to be settled within a month of the close of the financial year.

For change in law event, the ministry has actually specified the formula to be used to calculate compensation. Importantly, the issue of carrying cost or interest on delayed dues has been finally addressed, as this was being ignored by tribunals and commissions across the board due to not being mentioned in the PPA’s usually.

Both the notifications should go some way towards removing any subjectivity and confusion around judgements from state electricity tribunals, and are a major step towards a uniform application of the law for all players. To that extent, we expect the industry will welcome the same, and hope to see its implementation on the ground soon. The earliest test cases should come up soon enough, as both the CERC and APTEL are handling cases involving these very issues as we write this.