Government Amends Electricity Rules to Boost Surplus Power Sales on Exchanges

In a bid to enhance the efficiency of the power sector and encourage the sale of surplus electricity, the government has introduced amendments to the Electricity (Late Payment Surcharge and Related Matters) Rules 2022. These changes specifically target power generation companies, stating that those not offering surplus electricity on the exchanges within their declared generation capacity, but not required by distribution companies, will be ineligible to claim capacity or fixed charges for the same.

Furthermore, the amended rules restrict the sale of surplus power on the power exchange to not more than 120% of the energy charge plus applicable transmission charges. This move is expected to increase the chances of surplus electricity being purchased and utilized effectively, addressing issues related to excess capacity.

Power Minister RK Singh highlighted a key amendment concerning surplus power within the declared generation capacity but not requisitioned by distribution companies. The goal is to ensure a more streamlined process for the utilization of surplus power, contributing to the overall efficiency of the power distribution system.

The amendments also align the rules with statutory provisions related to accessing the national power grid. According to the updated regulations, if outstanding dues are paid, the regulation of access will promptly end, and restoration of access must occur within a day after payment. This provision is set to benefit distribution companies facing curtailment of access due to payment defaults, allowing them quicker restoration of access to the national grid once outstanding dues are settled.

The government emphasizes that these changes will play a pivotal role in maintaining an adequate supply of electricity to meet the country’s growing demand. The amendments aim to strike a balance between the interests of power generation companies and distribution companies while ensuring the smooth functioning of the national power grid.

The Electricity (Late Payment Surcharge and Related Matters) Rules were initially introduced in 2022 to address cash flow challenges faced primarily by generation and transmission companies. The objective was also to promote timely payments across the power sector. Subsequently, significant progress has been made in recovering outstanding dues, with most distribution companies now adhering to regular payment schedules.

As of February 2024, the total unpaid bills have reduced to around ₹48,000 crores from approximately ₹1.4 lakh crores in June 2022, reflecting a positive impact of the implemented rules.

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