Greetings to you and your loved ones!
We extend a warm welcome as we reconnect with you through our newsletter for the month of August 2023. In our continuous commitment to keep you well-informed about the ever-evolving legal landscape of the energy sector in India, we have curated the latest updates which includes regulatory and policy developments, and noteworthy judgements.
REGULATORY UPDATES:
- Draft Green Energy Open Access Regulations by Odisha Electricity Regulatory Commission (OERC)
On July 31, 2023, the OERC released draft regulations applicable exclusively for availing renewable energy through open access by intra-state consumers. The draft regulations provide that only consumers contracting demand or sanctioned load of 100kW and above shall be eligible to take power through green energy open access and that there is no limit of supply of power for the captive consumers. The SLDC shall act as the nodal agency for granting intra-state green energy on short term basis while for medium and long-term access, the state transmission utility shall act as the nodal agency. The draft regulations also provide for the procedure for grant of and charges to be levied for green energy open access. The objections and suggestions were invited from the stakeholders till August 28, 2023.
- Enforcement of Several Regulations
On August 03, 2023, Central Electricity Regulatory Commission (CERC) issued several notifications and held that CERC (Sharing of Inter-State Transmission Charges and Losses) ( First Amendment) Regulations, 2023, CERC (Indian Electricity Grid Code) Regulations, 2023, CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 to the extent not enforced and CERC (Connectivity and General Network Access to the inter-State Transmission System) (First Amendment) Regulations, 2023 to the extent not enforced shall all come into effect from October 01, 2023.
- Draft Green Energy Open Access Regulations by Maharashtra Electricity Regulatory Commission (MERC)
On August 5, 2023, the MERC released draft regulations under which consumers, or entities with a contract demand of 100 kW or more can access renewable power through open access, with no power supply limitations for captive consumers. Consumers with multiple connections must inform the distribution licensee in advance regarding the percentage share of energy generation from the renewable energy projects to each such connection to enable the distribution licensee to account for the same appropriately. Cross-subsidy surcharges for green energy open access consumers will not exceed 50% of the surcharge for the first 12 years from project operation. The surcharge is waived for non-fossil fuel-based waste-to-energy projects and when green energy is used for green hydrogen or green ammonia production. Banking charges will be set at 8% of the energy banked. The objections and suggestions were invited from the stakeholders till August 25, 2023.
- Amendments to Standard Bidding Documents for Procurement of Inter-State Transmission Services (ISTS) through Tariff Based Competitive Bidding (TBCB) Process
On August 8, 2023, the Ministry of Power (MoP) introduced new technical qualification requirements for procurement of ISTS through TBCB process with respect to high-voltage direct current system. Bidders are now required to demonstrate experience of development of projects in the infrastructure sector in the last 10 years instead of 5, and meet specified capital expenditure thresholds for at least one project instead of every project. These changes offer flexibility and will be in effect for two years from the date of issuance.
- Amendments to Mines and Minerals (Development and Regulation) Act, 1957
On August 9, 2023, the Mines and Minerals (Development and Regulation) Amendment Act, 2023 was notified to promote the exploration and extraction of critical minerals essential for India’s economic growth, technological advancements, and energy transition. Six minerals from a list of twelve atomic minerals including lithium and titanium, were omitted to encourage the involvement of the private sector to explore and mine them, and thereby reduce the country’s dependence on imports. The amendments also empowered the Central Government to auction concessions for critical minerals like molybdenum, tungsten, and graphite to expedite mining activities which will be beneficial towards modern technologies, food security and energy transition. Further, the introduction of exploration licenses for deep-seated minerals will encourage FDI and smaller mining companies to mine high-value minerals such as gold, copper, and platinum.
- Amendments to Offshore Areas Mineral (Development and Regulation) Act, 2002
On August 10, 2023, the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023 was notified to make the allocation process for operating rights in offshore areas for mining activities fairer and more transparent by implementing an auction method. The amendments include setting limits on the total area one entity can acquire in offshore areas, creation of a non-lapsable Offshore Areas Mineral Trust funded by an additional levy on mineral production, and timelines for production commencement and dispatch after the execution of production leases.
- CERC Releases Special Instructions
On August 15, 2023, the CERC issued directions under CERC (Indian Electricity Grid Code) Regulations, 2010, in response to a high demand period and load shedding. The directions require state load dispatch centers (SLDCs) to provide drawl schedules to regional load dispatch centers (RLDCs) on a day-ahead basis. RLDCs must also convey ex-power plant dispatch schedules to inter-state generating stations (ISGS) based on these drawl schedules. ISGS are allowed to sell requisitioned power in the day-ahead market, with certain conditions. These directions are effective immediately after the Grid Code is implemented.
- Green Hydrogen Standard Announced Under the National Green Hydrogen Mission
On August 18, 2023, the Ministry of New and Renewable Energy notified the Green Hydrogen Standard for India, which defines Green Hydrogen as hydrogen produced using renewable energy and production through inter alia conversion of biomass or electrolysis. The Ministry will specify a detailed methodology for measurement, reporting, monitoring, onsite verification and certification of green hydrogen and its derivatives. The Bureau of Energy Efficiency shall act as the nodal authority for accreditation of agencies for the monitoring, verification, and certification for Green Hydrogen production projects.
- Guidelines Issued for Wind-Solar Hybrid Projects
On August 21, 2023, the MoP notified the guidelines for tariff based competitive bidding process for procurement of power from grid connected wind solar hybrid projects. These guidelines are applicable to projects with capacities of 10 MW and above for intra-state transmission and 50 MW and above for inter-state transmission. At least 33% of the total capacity must come from either wind or solar resources. The period of power purchase agreement is set at 20 years from the commissioning date, which is extendable to 25 years if procurer grants an extension due to circumstances beyond the generator’s control. The guidelines also include changes in bidding timelines, bid structure, power procurement regulations, payment security mechanism, power supply commencement, and penalties for delays.
- Staff Paper on Market Coupling Released by CERC
On August 21, 2023, the CERC released a staff paper discussing market coupling addressing the prevalent regulatory provisions, international market experience especially the European market, market coupling within India’s context and key issues and challenges. The paper raised several relevant questions such as relevance for market coupling in India’s current power market scenario, effect of coupling on technological innovation and competition, market coupling operator, and first market segment for introduction of coupling. CERC has invited comments from the stakeholders on the issues and questions highlighted in this paper.
- Draft Cross Border Trade of Electricity Regulations Released by CERC
On August 28, 2023, the CERC released the CERC (Cross Border Trade of Electricity) (First Amendment) Regulations, 2023 wherein a new clause was inserted which provided for a settlement nodal agency charge. This charge is payable to the agency by the cross-border customers for discharging the mandated functions. The comments were invited from the stakeholders till September 11, 2023.
JUDICIAL UPDATES
- Tehsil Bar Association, Ghaziabad v. U.P. Power Corporation Limited & Ors., Allahabad High Court, Writ – C. No. 2673/2023
The Tehsil Bar Association filed a writ petition challenging the decision of the Uttar Pradesh Power Corporation Limited (UPPCL) to charge commercial electricity rates for lawyers’ chambers in the Tehsil compound. The petitioner argued that lawyers’ chambers are used for professional purposes, which are not commercial, and cited previous court judgments supporting this view. UPPCL claimed that lawyers’ activities in their chambers are non-domestic and should be charged commercial rates, referring to the rate schedule approved by the Uttar Pradesh Electricity Regulatory Commission (UPERC), which lacks a specific rate for lawyers’ chambers. The Court ruled in favour of the petitioner, stating that UPPCL was unjustified in applying commercial rates to lawyers’ chambers and highlighted that the legal profession is a service to society and is not a commercial endeavour. The UPERC’s prior circulars had classified lawyers’ chambers’ electricity usage as domestic and consequently, the Court instructed UPPCL to charge the petitioner association and its members at domestic electricity rates and refund any excess charges.
- State by PI Mescon Vigilance Squad, UDUPI v. B Usman Beary, Karnataka High Court, Criminal Appeal No. 1128/2011
This judgment pertains to an appeal by the State to modify and enhance the sentence passed against the respondent accused in a case related to offenses under Sections 135 and 138 of the Electricity Act, 2003. The accused had been convicted for these offenses and sentenced to pay a fine of Rs. 5,000 each for the offenses under the two provisions, in addition to paying a back-billed amount of Rs. 36,063. The accused did not challenge this conviction. Upon the issue of raising the amount of fine, the Court analyzed Section 135 of the Act, which deals with the theft of electricity, and noted that the proviso (i) of Section 135(1) specifies that for the first conviction, the fine imposed should not be less than three times the financial gain from such theft of electricity. The Court concluded that the sentence imposed by the Special Court for the offense under Section 135 was less than the minimum sentence required by the Act. Therefore, it modified and enhanced the sentence for this offense to Rs. 1,08,189. The accused was allowed to deposit this modified fine amount in instalments, and if not deposited within six months, it would be recovered by the Special Court in accordance with the law.
UPCOMING
- CERC Invites Comments on Terms and Conditions of Tariff
On September 10, 2023, the CERC released the CERC (Terms and Conditions of Tariff) (Fourth Amendment) Regulations, 2023 which omitted the Regulation 17 of the (Terms and Conditions of Tariff) Regulations, 2019. Regulation 17 provides that a thermal generating station that has completed 25 years of operation from the date of commercial operation and the beneficiary, may agree on an arrangement, including provisions for target availability and incentive. The beneficiary shall have the right of first refusal and upon its refusal to enter into the arrangement, the generating company can sell the electricity generated from such station in any manner it deems fit. CERC has invited comments, suggestions, or objections to be sent to secy@cercind.gov.in on or before October 1, 2023.
DISCLAIMER
The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at knowledge@sarthaklaw.com.
We will be back next month with another update. Thank you for reading!