Happy New Year to you and your loved ones!
We extend a warm welcome as we reconnect with updates for the months of November and December 2023. This newsletter curates the latest regulatory and policy developments, and noteworthy judgements.
REGULATORY UPDATES:
- Gujarat and Rajasthan Introduce New Approaches to Renewable Energy
Gujarat and Rajasthan have recently unveiled comprehensive policies to bolster their clean energy portfolios. As of September 2023, Gujarat’s total installed renewable energy capacity of 21,715.45 MW, consisting of wind and solar sources, makes up approximately 16% of India’s renewable energy portfolio. Rajasthan has a total installed renewable capacity of 23,431.56 MW, of which 77% is solar power. These states have aligned their policies with national goals, emphasizing substantial investments, effective land utilization, and diversification of renewable energy baskets.
The Gujarat Renewable Energy Policy, 2023 focuses on tapping the state’s substantial solar (36 GW) and wind (143 GW) potential and aims to develop 100 GW of cumulative renewable energy capacity by 2030, involving an investment of approximately Rs. 5,000 billion and utilizing around 400,000 acres of land. This aligns with the goal of achieving 50% of total installed capacity from non-fossil fuel sources by 2030.
The Rajasthan Renewable Energy Policy, 2023 aims for 90 GW of clean power projects over four years, diversifying into solar, wind, and hybrid sources, along with hydro, pumped storage plants, and battery energy storage systems. The policy introduces facilitation charges, solar parks, rooftop solar under net and gross metering, decentralized solar projects, wind projects, hybrid power projects, hybridization of thermal power plants, hydropower, storage projects, standalone battery energy storage systems, renewables-based EV charging stations, and floating solar projects.
- Amendment to Guidelines for Tariff-Based Competitive Bidding (TBCB) Procedure
The Ministry of Power (MoP) amended the guidelines for TBCB in the procurement of power from grid-connected wind power projects. Under the amendment, wind power generators are allowed to commence power supply from the entire or partial capacity of the project before the scheduled commercial operation date, provided there is transmission connectivity and long-term access/ general network access. The developers must give 15-day advance notice to both the end procurer(s) and the intermediary procurer for early commissioning, and acceptance must be received within 15 days. If acceptance is not received within the stipulated period, the developer can sell the unaccepted power on power exchanges or through bilateral arrangements.
- Central Electricity Regulatory Commission (CERC) Releases the Draft Transmission License Regulations
On November 24, 2023, the CERC introduced the Draft CERC (Procedure, Terms and Conditions for grant of Transmission License and other related matters) Regulations, 2023 outlining the eligibility criteria for obtaining a license, including selection through competitive bidding, appointment by the central government or its authorized agency for regulated tariff projects, and bulk consumers with a load of 50 MW or more seeking self-consumption through a connecting transmission line. Moreover, the draft regulations propose to allow bulk consumers to have their connecting transmission line constructed, maintained, and operated by a transmission licensee instead of obtaining the license directly. It even highlights that delayed or non-payment of the license fee for over 60 days will be considered a breach of license terms, regardless of the licensee’s liability to pay late payment surcharge under existing regulations.
- Government Announces Mandatory Blending of Compressed Bio-Gas (CBG) in Compressed Natural Gas (CNG) and Piped Natural Gas (PNG)
On November 24, 2023, the National Biofuels Coordination Committee, chaired by the Union Petroleum Minister Hardeep Singh Puri, introduced a phase wise mandatory blending of CBG in CNG for transportation and PNG for domestic use. The CBG Blending Obligation (CBO) aims to promote circular economy principles and reduce greenhouse gas emissions. The CBO, starting with voluntary participation until financial year 2024-25, becomes mandatory from financial year 2025-26, with initial blending percentages of 1% to 4%, increasing to 5% from FY 2028-29. A Central Repository Body will monitor the process, anticipating a boost in investment and the establishment of 750 CBG projects by FY 2028-29. Additionally, discussions on promoting ethanol production from maize and indicative blending targets for Sustainable Aviation Fuel (SAF/Bio-ATF) took place. The Ministry of New and Renewable Energy (MNRE) also allocated physical targets for small biogas projects under the Biogas Program Phase II for FY 2023-24. The unified registration portal for GOBARdhan streamlines the setup of CBG plants, acting as a centralized platform for investment and participation in the sector nationwide.
- Haryana Electricity Regulatory Commission (HERC) Grants Approval for Green Energy Open Access Procedures
On November 29, 2023, the HERC approved the procedures for Connectivity & Green Energy Open Access in response to a petition by Haryana State Load Dispatch Centre and Haryana Vidyut Prasaran Nigam Limited. Aligned with the HERC (Green Energy Open Access) Regulations, 2023, these procedures aim to integrate green energy into Haryana’s grid. HERC, after conducting stakeholder consultations, deemed public hearings unnecessary, and approved the procedures with minor modifications. The decision emphasized a balanced approach for a smooth transition to green energy integration in Haryana’s electricity grid.
- Arunachal Pradesh State Electricity Regulatory Commission (APSERC) Releases Draft Green Energy Open Access Regulations
On November 29, 2023, the APSERC introduced draft regulations titled APSERC (Terms and Conditions for Green Energy Open Access (GEOA) and Methodology for Calculation of Charges) Regulations, 2023. These regulations aim to promote the integration of renewable energy sources into the power sector by facilitating open access through intra-state transmission systems and distribution networks. The guidelines delineate structures for long-term, medium term as well as short-term open access, defining the duration, priority, and eligibility criteria for consumers. The Arunachal Pradesh State Load Despatch Centre functions as the state nodal agency for grant of long term, medium term and short-term green energy open access, and existing users can continue accessing the same until the specified period, subject to compliance with the regulations. GEOA users shall receive preference over regular open access users, and the rules cover aspects like transfer of access rights, curtailment priorities, and distribution licensees providing green certificates for exceeding renewable purchase obligations.
- Bihar’s Latest Electric Vehicle Policy to Provide ₹125,000 Incentives for New EV Purchases
On December 5, 2023, the Government of Bihar approved a five-year Electric Vehicle (EV) Policy aimed at promoting EV adoption and charging infrastructure. The policy targets making EVs account for 15% of new vehicle purchases in the state by 2028. Incentives include up to Rs. 1,25,000 (~$1,499) for the first 1,000 four-wheeler EV purchases, a 50% minimum rebate on Motor Vehicle Tax for all new EVs, and additional benefits for SC/ST consumers. The policy also outlines provisions for charging infrastructure incentives and encourages EV battery recycling initiatives. The regulations aim to align Bihar with the national goal of fostering a sustainable EV ecosystem.
- MNRE Updates Policy for Revamping Wind Power Projects
On December 7, 2023, the MNRE introduced the ‘National Repowering & Life Extension Policy for Wind Power Projects – 2023‘ to enable the replacement of old wind turbines with more efficient ones. This policy allows repowering before the end of the turbines’ design life and enhancing energy yield per square kilometer using the latest wind turbine technologies. A Wind Repowering Committee will be formed to oversee policy implementation, and repowering projects will receive numerous benefits and incentives. The National Institute of Wind Energy estimates the country’s repowering potential to be 25.4 GW. The policy outlines criteria, financing details, and Power Purchase Agreements for repowering projects.
- MoP Releases Proposed Changes to Electricity Consumer Rights
On December 13, 2023, the MoP released the Draft Electricity (Rights of Consumers) Second Amendment Rules, 2023 and invited comments from stakeholders. According to the proposed changes, distribution licensees are mandated to provide individual connections for electricity supply to owners or occupants of premises in group housing societies, residential colonies, registered resident welfare associations, or similar bodies upon request. Additionally, a separate connection for electricity supply for electric vehicle charging systems must be provided upon request. The draft rules also outline the time frame for the testing of meters in response to consumer complaints.
- Ministry of Power Releases Draft Amendments to Electricity Rules on Late Payment Surcharge and Related Matters in 2023
On December 13, 2023, the MoP introduced the Draft Electricity (Late Payment Surcharge and Related Matters) Amendment Rules, 2023. The proposed changes outline specific actions to be taken when there is non-payment of dues by the distribution licensee or other users of the transmission system. This includes situations where payment is not made even after two and a half months from the presentation of the bill by the generating company, transmission licensee, trading licensee, or in case of default in the payment of instalments. The amendment also proposes to bring regulations to short-term access, temporary general network access (T-GNA), or general network access (GNA) for the sale and purchase of electricity through short-term contracts via power exchanges. These regulations will be applicable to both new and existing short-term access or T-GNA or GNA arrangements.
- CERC Introduces the Third Amendment to CERC (Terms and Conditions of Tariff) Regulations in 2019
On December 15, 2023, the CERC introduced the CERC (Terms and Conditions of Tariff) (Third Amendment) Regulations, 2023. The amendment inter alia has added clause 4(iii) and clause 5(iii) under Appendix-II of the principal regulation. The clause 4(iii) lays down that the shutdown of transmission lines due to projects by entities like the National Highway Authority of India, Railways, and Border Road Organization, shall be deemed to be available for the period so determined by the Member Secretary of the Regional Power Committee. Whereas clause 5(iii) provides that the outage period which can be excluded for the purpose of sub-clauses (i) and (ii) of this clause shall be declared up to a maximum of 1 month, 1 to 3 months and beyond 3 months by Member Secretary of the Regional Power Committee, Regional Power Committee and the Commission, respectively, as the case may be.
- CERC Introduces First Amendment to CERC (Cross Border Trade of Electricity) Regulations, 2019
On December 15, 2023, the CERC introduced the CERC (Cross Border Trade of Electricity) (First Amendment) Regulations, 2023 which outlined the settlement nodal agency (SNA) charge, specifying the payment to be made by participating entities in neighboring countries for the SNA’s mandated functions. Additionally, the SNA is authorized to collect a charge of 0.50 paisa per kWh on the scheduled energy, along with implementing a payment security mechanism for the charges collected by it.
- Ministry of External Affairs (MEA) Releases Regulations for Offshore Wind Energy Site Leasing
On December 19, 2023, the MEA released the Offshore Wind Energy Lease Rules, 2023, outlining regulations for leasing areas for offshore wind energy projects. The initial lease period for resource measurements and surveys is 3 years, extendable for 2 more years. After 5 years, all clearances will be revoked. The lessee must submit study data to the National Institute of Wind Energy. For construction and operation, the lease can be extended for up to 35 years. The leased area can range from 25 to 500 sq km. The deposit, annual lease fees, and further adherence to environmental guidelines are stipulated under these rules. The rules also outline the rights and restrictions related to offshore wind activities and decommissioning guidelines of the lessee. Further, the lease cancellation criteria include environmental harm, violation of terms, and misuse.
JUDICIAL UPDATES
- Maharashtra State Electricity Distribution Company Limited v. Ratnagiri Gas and Power Private Limited & Ors., Supreme Court of India, Civil Appeal No. 1922/2023
The dispute in question arose from a Power Purchase Agreement (PPA) between Maharashtra State Electricity Distribution Company (MSEDCL) and Ratnagiri Gas and Power Pvt. Ltd. (RGPL), spanning 25 years. Due to a decline in gas supply, RGPL entered into a Gas Supply Agreement with GAIL for Recycled Liquid Natural Gas (RLNG). The Appellant, MSEDCL, refused to pay fixed capacity charges, citing a violation of PPA terms requiring prior approval for contracting terms and prices.
The central issue revolved around whether the CERC and Appellate Tribunal for Electricity (APTEL) were justified in holding the Appellant liable for fixed charges. The Supreme Court upheld the decisions, noting that RGPL’s alternative arrangement with GAIL was permissible under the contract, and the Appellant’s consent was irrelevant. The Court emphasized that different clauses in the PPA operated in distinct spheres, and commercial documents should be interpreted in line with the original intent of the parties. The Appeal was dismissed, allowing execution proceedings before APTEL to continue, considering RGPL’s circumstances and the uncontrollable shortfall in domestic gas.
- Juniper Hotels Private Limited v. Delhi Electricity Regulatory Commission & Anr., Delhi High Court, W.P. (C) 14343/2021
Juniper Hotels filed a writ petition challenging the Delhi Electricity Regulatory Commission (Renewable Purchase Obligation and Renewable Energy Certificate Framework Implementation) Regulations, 2021 and the Open Access Charges and Related Matters (Fourth Amendment) Order, 2021, which increased the renewable purchase obligations (RPO) and imposed additional surcharges. The petitioner, an open-access consumer, procured electricity through short-term contracts and objected to the altered RPO and charges, claiming a negative impact on competition and fairness, potentially leading to an oligopoly. The key question was whether the changes rendered the procurement of green energy unviable.
The Delhi High Court dismissed the challenge, stating that tariff fixation through subordinate legislation falls within the commission’s purview, and no manifest arbitrariness was demonstrated. The court referred to State of Rajasthan v. J.K. Udaipur Udyog Limited, highlighting that government-granted exemptions and concessions are privileges without legally enforceable rights. The court rejected the petitioner’s claims of due process failure, noting the flexibility of governing bodies to modify concessions in the public interest. It emphasized the narrow scope of judicial review over tariff rate determinations, justifiable only in the presence of illegality, arbitrariness, or actions beyond statutory powers.
- Mangalam Cement Limited v. Jaipur Vidyut Vitran Nigam Limited (JVVNL) and Rajasthan Electricity Regulatory Commission (RERC), Appellate Tribunal for Electricity, Appeal No. 230/2018
Mangalam Cement Limited (Appellant) is a wind energy generator and has set up wind energy plants in Rajasthan in 2007, 2008 and 2010, under the Government of Rajasthan policy of 2004. Separate PPAs have been executed between the Appellant and JVVNL for these wind energy plants. As per the Policy, these PPAs were to remain operational for a period of 20 years. The RERC issued fresh tariff regulations on February 24, 2014, which were applicable for a period of 5 years, i.e., from April 1, 2014, to March 31, 2019. JVVNL had applied these regulations to the PPAs and had issued a bill dated June 12, 2016, to the Appellant. These Regulations seek to alter clause 6 of the Policy, which deals with wheeling and banking, reducing the (a) banking period to one month as against the earlier yearly basis, and (b) the entitlement of the Appellant with regards unutilized banked energy to only 10% payable at 60% of the energy charges applicable. The Appellant contended before the RERC that the provisions pertaining to wheeling and banking were a part of the Policy and cannot be amended by the regulations. RERC ruled against the Appellant and dismissed a review petition filed by the Appellant. The issue arising for consideration is whether the regulations will be applicable to the PPAs which were executed way before the notification of these regulations or are these PPAs immune from these regulations. Upon a close reading of the relevant clause (5)(B)(d) of the Wheeling and Banking Agreement executed between the Appellant and JVVNL, it is clear that the parties never intended to keep the payment of unutilized banked energy unchanged for the entire period of 20 years. The said clause also provides that banking of energy shall be governed by orders to be passed by RERC from time to time. Thus, provisions pertaining to banking of energy and payment for unutilized banked energy are amenable to any subsequent rules/regulations promulgated by the RERC. The Hon’ble Appellate Tribunal for Electricity, in the light of the Supreme Court’s judgement in PTC India Ltd v. CERC, wherein it was held that regulations issued under the Electricity Act of 2003 override existing contracts, upheld the order of RERC and dismissed Mangalam’s appeal.
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!