Karnataka’s power regulator has reportedly started approving old PPAs with wind energy developers, sparking optimisms that discoms and regulators will stop resisting older PPAs on grounds of steep fall in tariffs in recent auctions for such projects.
Karnataka Electricity Regulatory Commission (KERC) has so far endorsed one wind energy power purchase agreement (PPA) at the original tariff of Rs 4.50 per unit, ending a month-long dispute with the state government. However, MK Shankarlinge Gowda, chairman at KERC speaking to ET said, “There will be no blanket approval of all the PPAs. We are evaluating each project on a case-by-case basis.”
According to the publication, discom in a letter dated November 23 has stated that 270.5 MW of PPAs signed before March 31, 2017, would be approved at the old tariff. Discoms and regulators are reluctant to honour older PPAs because of a fall in proposed tariffs in later auctions.
In August this year MNRE wrote to seven main wind energy producing states to ensure that PPAs signed at higher tariffs — when capital costs were also higher — were approved and duly honoured by their regulators and discoms.
The dispute in Karnataka accelerated after KERC passed an order on September 4, setting a fresh wind energy tariff of Rs 3.74 per unit, terminating its earlier order of February 2015 that had fixed the tariff at Rs 4.50 per unit. The lowering of tariff was prompted by wind energy auctions held by SECI, which saw winning tariffs drop sharply.
KERC declared that all PPAs it had not yet approved would be passed only at the new tariff of Rs 3.74 per unit. This created a problem for 599 MW of PPAs, which had been signed with various discoms in Karnataka at a tariff of Rs 4.50 per unit, but were awaiting KERC approval.