The power distribution companies of Telangana have mooted revision of power charges every month by appealing to the Telangana State Electricity Regulatory Commission (TSERC) to amend a regulation of TSERC so as to put a mechanism in place for automatic pass through of power purchase cost adjustment recoverable on a monthly basis. In the absence of such a mechanism, the Discoms were so far raising cost adjustments as true-up in the Average Revenue Requirements filed with TSERC in the following year. The amendment will ensure that the costs were recovered from the Discoms on a monthly basis. The latest filing of ARRs by the Discoms highlighted that the Central government had notified Electricity (Timerly Recovery of Costs due to change in Law) Rules, 2021 two months ago which provided for an automatic pass through of impact in cost due to change in law automatically by a formula. These rules shall apply to generating companies and transmission licensees to recover costs due to change in law from the Discoms on monthly basis. However, there was no such automatic pass through mechanism of power purchase true-up applicable to Discoms in the erstwhile Andhra Pradesh Electricity Regulatory Commission (APERC) regulations of 2005 as adopted by TSERC immediately after formation of Telangana State.

The implementation of the said rules by generating companies or transmission licensees on monthly basis without provision for the distribution licensees to recover the same on monthly basis from the consumers will have adverse impact on financials of Discoms, leading to huge working capital costs and also affect the entire value chain of power sector.

Therefore, the Discoms prayed to TSERC to amend the relevant regulation of 2005 so as to put in place a mechanism for automatic pass through of power purchase cost adjustment in view of enforcement of electricity rules 2021 by the Central government.

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