MERC Regulations 25Chapter D · Electricity Purchase and Procurement

Section 25 · Short-term power procurement

- 25.1 The Distribution Licensee shall undertake his power procurement during the year in accordance with the power procurement plan for such year approved by the Commission in accordance with Regulation 76.5 below.

25.2

Subject to the exceptions contained in this Regulation 25, any variation, during any quarter of a financial year, in the quantum or cost of power procured and any procurement from a source other than a previously approved source, in excess of five (5) per cent of the quantum or cost, as the case may be, of power procurement for such quarter, as approved by the Commission in the power procurement plan of the Distribution Licensee, shall be only with the prior approval of the Commission.Provided that a variation in the cost of power procured on account of changes in the price of fuel, calculated in accordance with Regulation 82, shall not be included in determining the need for prior approval of the Commission under this Regulation 25.2.

25.3Where there has been a shortfall or failure in the supply of electricity from any approved source of supply during the financial year, the Distribution Licensee may enter into a short-term arrangement or agreement for procurement of power without the prior approval of the Commission where the tariff for power procured under such arrangement or agreement is determined in accordance with -

(a)a transparent process of bidding in accordance with guidelines issued by the Central Government; or

(b)the terms and conditions contained in Part E of these Regulations.

25.4Notwithstanding anything contained in Regulation 25.2, where the Commission has notified that a shortage of supply of electricity exists and has fixed a minimum and maximum ceiling of tariff for sale or purchase of electricity, in pursuance of an agreement, entered into between a Generating Company and a Licensee or between Licensees, for a period not exceeding one year, the Distribution Licensee may procure power within such minimum and maximum ceiling of tariff without the prior approval of the Commission.

25.5Where the Distribution Licensee seeks to procure power in excess of the quantum approved by the Commission in his approved power procurement plan under Regulation 76.5 and expects to sell such additional power at a tariff higher than the cost of supply to the consumer, the Distribution Licensee may enter into a short term arrangement or agreement for procuring such additional power without the approval of the Commission.

25.6Where the Distribution Licensee has identified a new short-term source of supply from which power can be procured at a tariff that reduces his approved total power procurement cost, the Distribution Licensee may enter into a short-term power procurement agreement or arrangement with such supplier without the prior approval of the Commission.

25.7The Distribution Licensee may enter into a short-term arrangement or agreement for procurement of power without the prior approval of the Commission when faced with emergency conditions that threaten the stability of the distribution system or when directed to do so by the State Load Despatch Centre to prevent grid failure.

25.8Within fifteen (15) days from the date of entering into an agreement or arrangement for short-term power procurement for which prior approval is not required, the Distribution Licensee shall provide the Commission, full details of such agreement or arrangement, including quantum, tariff calculations, duration, supplier details, method for supplier selection and such other details as the Commission may require with regard to such agreement/arrangement to assess that the conditions specified in this Regulation 25 have been complied with:Provided that where the Commission has reasonable grounds to believe that the arrangement or agreement entered into by the Distribution Licensee does not meet the criteria specified in Regulation 25.3 to Regulation 25.7 above, the Commission may disallow any increase in the total cost of power procurement (net of additional revenue) over the approved level arising therefrom or any loss incurred by the Distribution Licensee as a result, from being passed through to consumers as an adjustment in tariffs.

25.9Subject to the cases specified in Regulation 25.3 to Regulation 25.7 above, where the Distribution Licensee enters into any agreement or arrangement for short-term power procurement without the approval of the Commission, any increase in the total cost of power procurement (net of additional revenue) over the approved level arising therefrom shall be deemed to be a variation in performance attributable entirely to controllable factors.

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