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Andhra Pradesh issues draft regulations for ‘renewable purchase obligation’

According to reports,the Andhra Pradesh Electricity Regulatory Commission (APERC) on Friday came out with its draft regulations for ‘renewable purchase obligation’ – a measure that obliges certain electricity consumers and distribution companies to purchase a certain quantum of either power produced from renewable sources or ‘renewable energy certificates’.

AP is among the last few States – in fact, the 26th State – to come out with RPO regulations. All but Delhi of the other states have final regulations in place. Delhi, and now Andhra Pradesh, are at the ‘draft regulations’ stage.

AP’s draft regulations impose an obligation on electricity distribution companies in the state, captive power projects and ‘open access consumers’ (mostly, industries who buy power from the market). These ‘obligated entities’ need to purchase 5 per cent of the consumption (or sales) from renewable sources. Of this 5 per cent, 0.25 per cent must be from solar power plants.

The regulations apply for the period between April 1, 2014 and March 31, 2019.

The ‘green industry’ is unhappy over the draft regulations.

Experts such as Mr Vishal Pandya of REConnect, a consultancy, note that the draft regulations are out of sync with the national vision of bringing in a green power purchase obligation of 15 per cent on the obligated entities. Even the Forum of Regulators, of which APERC is a member, has resolved to target an RPO of 10 per cent by 2014-15.

Secondly, the draft regulations say that the current RPO rules will hold till March 31, 2014. These rules too impose a 5 per cent RPO, but there is no clarity on penalty for default. This practically means that obligated entities in the State have no legal compulsion to meet their obligation till April 2014.

Finally, the AP draft regulations do not define the ‘average pooled purchase cost’ (APPC), which refers to the average price a distribution company buys electricity at. The APPC is significant because if a renewable electricity generation company sells to the distribution company at a higher price than the APPC, it is not eligible for the market trade-able renewable energy certificates.

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