Andhra Pradesh government makes key changes to its energy policies

The Andhra Pradesh government on Monday made several key changes to its policies on solar, wind and hybrid power, primarily withdrawing the facility for energy banking and drawal that was purportedly causing a huge financial drain on the power distribution companies (Discoms). In an order, the Jagan Mohan Reddy government said it has observed statutory audit has reported an abnormal spurt in power purchase cost and deteriorated financial position of the Discoms.

"Taking this into consideration, and in order to strengthen the financial position of the power utilities, amendments have been made to the policies, Energy Secretary Srikant Nagulapalli said in the order.

It also said any injection of energy between synchronisation and declaration of Commercial Operation Date shall be treated as inadvertent power and no cost shall be paid by the Discoms. The changes to the solar, wind and hybrid (solar + wind) power policies have been made in the backdrop of the YSRC government's process of reviewing all power purchase agreements entered into by the previous TDP regime with renewable energy generators.

The policies, brought in by the previous Telugu Desam Party government in January this year, enabled 100 per cent banking of energy all through the year. According to the January policy, the unutilised banked energy shall be considered as deemed purchase by Discoms at 50 per cent of the average pooled power purchase cost, as determined by the Andhra Pradesh Electrity Regulatory Commission (APERC) for the applicable year.

Payment for the deemed purchase was, however, capped at 10 per cent of the total banked energy during the applicable year. Ever since he assumed power in May, Jagan has been alleging the PPAs signed by the Chandrababu Naidu government caused a loss of Rs 5,000 crore to the state exchequer and left the power utilities bleeding. The government started a process for re-negotiating the PPAs with the green energy generators, ignoring the Centres warning against the move.

Challenging the government decision, over 40 power producers approached the state high court which has referred the matter to the APERC. In another significant amendment to the policies, the incumbent government altered the tariff stating that it shall not exceed difference between pooled variable cost and balancing cost for any variable renewable energy project. APERC will determine the pooled variable cost and balancing cost every year, the order added.