Power Ministry Announces New Rules For Sustaining Economic Viability, Easing Financial Stress

The ministry informed that timely recovery of the costs with the change in law assumes significance as the investment in the power sector depends on a great extent upon timely payments.

Outlook Business Team

Updated on: 23 October 2021 2:21 pm

Power Ministry Announces New Rules For Sustaining Economic Viability, Easing Financial Stress

Ministry of Power announced a new set of rules aimed at sustaining the economic viability of the power sector, easing the financial stress of various stakeholders and ensuring timely recovery of costs in electricity generation.?

Investors and other stakeholders in the power sector had been concerned about the timely recovery of the costs due to change in law, curtailment of renewable power and other related matters.

The rules have been categorised as Electricity (Timely recovery of costs due to Change in Law) Rules, 2021 and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.? The ministry informed that timely recovery of the costs with the change in law assumes significance as the investment in the power sector depends on a great extent upon timely payments.

The new rules provide that a must-run power plant will not be subjected to curtailment or regulation of generation or power supply because of merit order dispatch or any other commercial consideration. For curtailment or regulation of power, the provisions of the Indian Electricity Grid Code shall be followed. Should there be a curtailment of supply from the must-run power planet, the procurer would be liable to pay compensation to the must-run power plants at the rate specified in the agreement for purchase or supply of electricity.?

Also, the ministry informed that a new formula had been provided to calculate adjustments monthly owing to the impact of the change of law.

The RE generator is also allowed to sell power in the power exchange and recover the cost suitably. This helps in the realisation of revenue by the generator and also the power is available in the electricity grid for use of consumers.

The new rules would help in achieving the target of RE generation, the ministry informed. Additionally, this would ensure that consumers get green and clean power and in turn, ensure a healthy environment for the future generation.

"At present, the pass-through under change of law takes time. This impacts the viability of the sector and the developers get financially stressed. The rules would help in creating an investment-friendly environment in the country," it stated.

(With inputs from PTI)