India’s power ministry announces new rules to ensure economic viability of power sector

The Ministry of Power on Saturday announced new rules to sustain economic viability of the sector, ease financial stress of various stakeholders and ensure timely recovery of costs involved in electricity generation.

The ministry notified rules for the sustainability of the electricity sector and promotion of clean energy to meet the India’s commitment towards climate change, a statement said. The rules notified by the Ministry of Power under Electricity Act, 2003 are in the interest of the electricity consumers and the stakeholders, it added.

The rules include Electricity (Timely recovery of costs due to Change in Law) Rules, 2021. The other rule is Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.

The ministry explained timely recovery of the costs due to change in law is very important as the investment in the power sector largely depends upon the timely payments.

“At present, the pass through under change of law takes time. This impacts the viability of the sector and the developers get financially stressed. The rules would help in creating investment friendly environment in the country,” it stated.

The ministry said these rules will help in achieving the targets of RE generation. This will ensure that the consumers get green and clean power and secure a healthy environment for the future generation.

A formula has been provided to calculate adjustment in the monthly tariff due to the impact of change in law. The rules also provide that a must-run power plant shall not be subjected to curtailment or regulation of generation or supply of electricity on account of merit order dispatch or any other commercial consideration.

In the event of a curtailment of supply from a must-run power plant, compensation shall be payable by the procurer to the must-run power plant at the rates specified in the agreement for purchase or supply of electricity. The (Renewable Energy) RE generator is also allowed to sell power in the power exchange and recover the cost suitably. This helps in realisation of revenue by the generator and also the power is available in the electricity grid for use of consumers.

Leave a Reply

Your email address will not be published. Required fields are marked *