The approval is entirely the discoms’ concern and not that of Genco

The Andhra Pradesh Power Generation Corporation (APGenco) might have no locus standi to withdraw from the Power Purchase Agreements (PPAs) citing lack of approval from the AP Electricity Regulatory Commission (APERC), as the approval is entirely the discoms’ concern and not the Genco’s.

Officials from the Telangana Energy Department contend that the APGenco is not a licensed body, and hence, is in no way concerned with the approval of PPAs by the APERC. The Electricity Act, 2003, has de-licensed power generation, so only discoms as licensed utilities may approach APERC for approval of PPAs.

“The PPAs are filed before APERC only by discoms and not by generating company. The purpose is for the regulatory authority to check if the agreements are as per the prescribed norms in relation to the fixing of tariffs,” said the Principal Secretary (Energy) Suresh Chanda.

PPAs pertaining to nearly 4,500MW of power were signed in 2009 between the then APGenco and discoms, with retrospective effect from 2006. A fresh set of PPAs for 650MW were filed again in 2010, with the term fixed for 25 years since the beginning of generation. The earliest of the PPAs are to come to an end only by 2019.

While the APERC has not granted its approval as such for the PPAs, it has determined the generation tariffs pertaining to the agreements, up to May 31, 2014.

“The commission has also determined the discoms’ tariff proposals for retail supply business, every year since 2006-07 till 2013-14.

Details of generation and cost of purchase were mentioned plant by plant in all these proposals, based on which the final tariff was determined by the commission. The tariff orders are nothing but de-facto approvals of PPAs,” another official said.

Further, there is no cancellation or withdrawal clause in the PPAs. The most the APGenco can do is to apply for tariff amendments, that too with the consent of all the discoms involved, Mr. Chanda informed.