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Govt proposes amendments to Electricity Late Payment Surcharge Rules

Our Burea New Delhi | Updated on August 19, 2021

Power generation companies are being given an option to sell power to third party and recover their cost

In a bid to reduce the burden of the distribution licensee, the Power Ministry has circulated the draft Electricity (Late Payment Surcharge) Amendment Rules, 2021, seeking comments for the same, the Ministry said in a release.

The draft amendment rules have been placed on its website. The power generation companies are being given an option to sell power to third party and recover their cost, the release said. To this extent, the fixed cost burden of the distribution licensee shall be reduced, it added.

According to the release, the new rule has been inserted β€” if a distribution licensee has any payment including late payment surcharge outstanding after the expiry of seven months from the due date of payment as prescribed in the PPA power purchase agreement; then, notwithstanding anything contained in the PPA or the Power Supply Agreement, the generating company may sell power to any consumer or any other licensee or power exchanges, for the period of such default, while retaining its claim on payment of fixed charges or capacity charges from the distribution licensee, after giving a notice of at least 15 days to the distribution licensee. The claim, if any, shall be reconciled on annual basis and shall be limited, to only under recovery of the fixed charges or capacity charges.

Further, in order to boost the confidence of investor in generation projects, the generation project developer and also to reduce the burden of the distribution licensee, the order of payment that is the principle of first in and first out for payment of bills has been proposed through the rule β€” Order of Payment and Adjustment towards Late Payment Surcharge.

β€œAll the bills payable by a distribution licensee to a generating company or a trading licensee for power procured from it or to a transmission licensee shall be time tagged with respect to the prescribed date of payment specified in the power Purchase Agreement, and the payment shall be made by the distribution licensee first against the oldest procurement of power and then to the second oldest procurement and so on so as to ensure that payment against a procurement is not made unless and until all procurement older than it have been paid for,” the release added.

The release further stated that all payments by a distribution licensee to a generating company or a trading licensee for power procured from it or by a user of a transmission system to a transmission licensee shall be first adjusted towards Late Payment Surcharge and thereafter, towards monthly charges, starting from the longest overdue bill.

Published on August 19, 2021

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