The Andhra Pradesh Power Generation Corporation (APGenco) has decided to withdraw the power purchase agreements (PPAs) it entered into with the distribution companies for sale of power generated by its stations.

The APGenco has addressed a letter to the AP Electricity Regulatory Commission seeking its nod to cancel its PPAs with the discoms. The PPAs that have been filed before the regulator cover all the existing generating stations with a capacity of 6,549 MW, including five thermal stations (2,962 MW) and 14 hydro stations (3,586 MW).

The letter that was addressed by the Chief Engineer (Commercial) of APGenco to the APERC on June 16 comes in spite of the provision made in Schedule V of the AP Reorganisation Act that the “existing PPAs’’ signed by the power utilities would continue in the coming days. Interestingly, the APERC is yet to approve the long-term PPAs entered into by the APGenco with the distribution companies and the issue, according to sources, had been kept pending for want of audit reports and other relevant data.

The power utility’s decision would help it save around 450 MW that would otherwise be used to cater to the needs of Telangana.

But the utility’s decision could end up in legal wrangles if the Telangana power utilities decide to approach the court against the provision. “The APGenco is trying to make a case that the PPAs had no recognition or legal validity since they are not approved by the regulator,” a senior official told The Hindu.Experts feel that the issue could snowball into a major controversy if the APGenco continues insisting on permission to withdraw the PPAs. “What if the Telangana government takes up the case of cancelling the coal supply agreements signed for the existing power projects in Andhra Pradesh with the Singareni Collieries Company Limited?” an official preferring anonymity said, adding the issue could also have far-reaching implications on the relations between the two States.