CERC Provides Relief To Tata Power In Dispute With PGCIL Over Open Access

In a recent judgement concerning transnational electricity trade between India and Bhutan, the Central Electricity Regulatory Commission (CERC) granted the petition of Tata Power Trading Company Limited (TPTCL), requesting that its power purchase agreement (PPA) with Dagachhu Hydro Power Corporation (DHPC) be considered under the Ministry of Power’s (MoP) guidelines and the Cross Border Trade Electricity (CBTE) Regulations, dismissing the objections of the Power Grid Corporation of India Limited (CTUIL) and the Power System Operation Corporation Limited (POSOCO) against the petition.

In arriving at its judgement favouring TPTCL, CERC considered the following key issues:

Issue No.1: Whether the cross-border sale of electricity from DHPC to TPTCL is covered under the saving clause provided at paragraph 1.2 of the Guidelines and Regulation 3(3) of the CBTE Regulations?

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TPTCL entered into a PPA, valid up to March 2040, with DHPC in June 2008 for the supply of 114 MW (later revised to 126 MW) power from a hydropower project located in Bhutan to the delivery point of New Siliguri located in India.

Following the PPA’s signing and prior to the project’s commercial operation, TPTCL approached MoP, seeking ‘No Objection Certificate’, as required by CTUIL for connectivity to the Indian grid for the transfer of electricity to Indian utilities. MoP informed TPTCL that since the import of electricity had been shifted from restricted category to free category by the Ministry of Commerce, there was no need to obtain licence for the import of electricity from Bhutan.

The ministry further instructed TPTCL to approach CTUIL, the nodal agency, for processing its request for connectivity, which the latter denied, questioning the applicability of CBTE Regulations and MoP guidelines to TPTCL’s PPA.

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In response to this disagreement, CERC pointed out that as per the CBTE Regulations, any action taken for the cross border trade of electricity with a neighbouring country under any agreement made prior to the MoP Guidelines/CBTE Regulations coming into force will be governed by the said regulations and will continue to be valid till its expiry date.

Thus, the commission opined that the PPA between TPTCL and DHPC was within the purview of the MoP Guidelines as well as the CBTE Regulations and was required to be treated as if it had been entered into as per the said provisions.

Issue No.2: Whether the Petitioner is required to meet the additional requirement as specified under Regulation 12(2) including furnishing approval of the Designated Authority, i.e. Central Electricity Authority, or DA for its MTOA application for supplying electricity to WBSEDCL?

As per the CBTE Regulations, an entity located in India seeking connectivity or open access to the Indian grid in the course of cross border trade of electricity between India and any of the neighbouring countries is to be governed by the Connectivity Regulations and the Open Access Regulations. Notably, the project of DHPC is already connected to the Indian grid, and the delivery point under the PPA is also within India.

Therefore, CERC concluded, TPTCL’s application seeking Medium Term Open Access (MTOA) for the supply of electricity to West Bengal State Electricity Distribution Company (WBSEDCL) is not only governed by the Connectivity Regulations but also deemed to have been entered into under the MoP Guidelines and the CBTE Regulations and cannot be subjected to the additional requirements of the CBTE Regulations, such as the DA’s approval, as applicable in the case of a non-Indian entity.

“In other words, the said PPA dated 25.6.2008 entered into for import of electricity to the Indian grid is deemed to have the approval of the DA as required under the MoP Guidelines and the CBTE Regulations. Thus, once this arrangement is considered having approval of the DA, the Petitioner is not required to obtain the DA’s approval in respect of each and every open access, either STOA or MTOA, application for accessing the Indian grid for supplying electricity so imported under the said PPA dated 25.6.2008 to the Indian entities,” commented the commission.

The full judgement can be accessed here.