Central Electricity Regulatory Commission New Delhi

1 Statement of Reasons for 6th Amendment to CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations 2017 Page 1 Central Electricity Regulatory Commission New Delhi Coram: Shri A K Singhal, Member Shri A S Bakshi, Member Shri M K Iyer, Member No. L-1/(3)/2009-CERC: Dated: 28th March 2018 In the matter of Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) (Sixth Amendment) Regulations, 2017 Statement of Reasons 1.

2 The draft Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) (Sixth Amendment) Regulations, 2016 was issued vide notification dated along with detailed Explanatory Memorandum detailing the rationale for issuing the amendment. 2. Comments have been received from 49 stakeholders, organizations, and individuals, etc., which included State Power utilities, Central Electricity Authority (CEA), Central Transmission Utility (CTU), Power System Operation Corporation (POSOCO), DISCOMs, Open Access Associations and power producers associations, Solar Associations, SRPC, trading companies, Power Exchange, Inter-state transmission licensees, generating companies in Central sector and private sector.

3 Thereafter, the Commission conducted public hearing on Eight (08) organizations/ individuals including POSOCO, CTU, generating companies and trading companies made oral submissions or presentations during the public hearing. List of stakeholders who submitted written comments and who made oral submissions/power Statement of Reasons for 6th Amendment to CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations 2017 Page 2 point presentation during the public hearing is given at Appendix-I & Appendix-II respectively. 3.

4 After due considerations of the comments/ suggestions/ objections received and detailed discussions with the statutory authorities like Central Electricity Authority and Central Transmission Utilities as well as POSOOCO, the Commission has finalized and notified the 6th Amendment to the Connectivity Regulations. 4. Consideration of the views of the stakeholders and analysis and findings of the Commission on important issues: The amendments proposed in the draft regulations, deliberation on the comments/ suggestions offered by the stakeholders, statutory bodies and individuals, etc., on the proposed amendments and the reasons for decisions of the Commission are given in the succeeding paragraphs.

5 While an attempt has been made to consider all the comments/suggestions received, the names of all the stakeholders may not appear in the deliberations. 5. Sub-clause (l) of clause (1) of Regulation 2 Sub-clause (l) of clause (1) of Regulation 2 of the Principal Regulations was proposed to be substituted as under: (l) long-term access means the right to use the inter-State Transmission system for a period exceeding 7 years but not exceeding 25 years; The Commission had given following rationale while proposing amendment to sub-clause (l) of clause (1) of Regulation 2 of the Principal Regulations: Long term access is currently provided for a period of 12 years up to 25 years.

6 It is proposed that minimum period of long term access be reduced from 12 years to a period of 7 years to align it with long term contracts as provided in "Guidelines for Determination of Tariff by Bidding Process for Statement of Reasons for 6th Amendment to CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations 2017 Page 3 Procurement of Power by Distribution Licensees dated 19th January, 2005 as amended from time to time" which provides as follows: "Long-term procurement of Electricity for a period of 7 years and above;" Comments have been received from CEA, POSOCO, POWERGRID, Tata Power Trading Corporation Limited (TPTCL), KSEBL, MB Power, Malana Power company Limited (MPCL), AD Hydro Power Limited, J.

7 Sagar Associate (JSA), GUVNL, Jindal Stainless (Hisar) Ltd., Vedanta Limited, Shri Ravinder and WBSEDCL. Sh. Ravinder, TPTCL, WBSEDCL, MPCL, ADHPL and Vedanta have welcomed the amendment. CEA, KSEBL, GUVNL, Jindal Stainless (Hisar) Ltd. and POWERGRID have submitted that generally principal amount of debt is paid back in at least 12 years. Therefore, LTA should be at least for 12 years or more. TPTCL has requested to consider the tenure of Long term PPAs in case of Hydro Power Projects for a period up to 35 years as per the Tariff Policy notified on POWERGRID, WBSEDCL and MPCL have suggested to revisit the provision related to relinquishment under Regulation 18 to align with the reduction in the LTA period as per the proposed amendment.

8 Analysis and decision: We have considered the comments of stakeholders. With regard to comments of CEA, KSEBL, GUVNL, Jindal Stainless (Hisar) Ltd. and Shri Ravinder that generally principal amount of debt is paid back in at least 12 years and therefore, minimum period of LTA should be at least for 12 years or more, it may be noted that recovery of transmission charges for ISTS assets after being put to use is governed by the CERC (Sharing of inter-State Transmission Charges and Losses) Statement of Reasons for 6th Amendment to CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters)

9 Regulations 2017 Page 4 Regulations, 2010 whereunder the transmission charges are paid by users as per the usage of ISTS. Since the period of Long Term PPA has been prescribed in the Tariff Policy for 7 years and above, the Commission has considered it prudent to align the minimum period of LTA with that of the minimum period of PPA. TPTCL has suggested to prescribe the upper limit of LTA in the light of the , the upper limit of LTA has been removed. CTU may grant LTA for a period of 7 years or more as sought by Applicants and as per availability of ISTS. The comments of POWERGRID, WBSEDCL and MPCL on Regulation 18 related to relinquishment charges to align with period of LTA have been noted and shall be considered when need arises.

10 Accordingly the definition of long-term access has been modified as under: (l) long-term access means the right to use the inter-State Transmission system for a period exceeding 7 years. 6. Sub Clause (o) of clause (1) of Regulation 2 Sub Clause (o) of clause (1) of Regulation 2 of the Principal Regulations was proposed to be substituted as under: (o) Medium-Term Open Access means the right to use the inter-State Transmission system for a period equal to or exceeding 1 year but not exceeding 5 years; Comments have been received from CEA, POWERGRID, TPCIL, IEX, Jindal Stainless (Hisar) Ltd., KSEBL, TPTCIL and Vedanta Limited: CEA and POWERGRID have submitted that the period of MTOA should be equal to or exceeding 3 months but not exceeding 1 year.