ERC allows HT consumers to reduce contracted demand during lockdown

It sets aside Discoms’ plea to review relaxation in HT supply conditions

In a relief to the high-tension (HT) power consumers during the COVID-19 lockdown period, the Telangana State Electricity Regulatory Commission (TSERC) has dismissed a review petition filed by the two distribution companies (discoms) against relaxation of a clause in the general terms and conditions of supply (GTCS).

The Commission passed a suo-motu order on April 29 relaxing a clause of GTCS and a clause of Schedule-I of Regulation No. 5 of 2016 under which the HT consumers are allowed to seek reduction of contracted maximum demand (CMD) due to shutdown of their industrial activity following imposition of lockdown in the country, bringing all industrial activity to a grinding halt.

It stated that Government of India had imposed lockdown from March 25 to contain the spread of coronavirus and Telangana had imposed it from March 22 with exception to essential services. It was extended twice by the Centre and Telangana later to May 17 and 29, respectively.

In representations to the regulatory body the Federation of Telangana Chambers of Commerce and Industry and All India Induction Furnaces Association (South Central Region) explained that it was difficult for power-intensive industries to maintain their existing CMD or termination of agreement in respect of HT supply as the cost of maintenance was uneconomical and requested for relaxation of clause of GTCS under Force Majeure situation.

Hardships acknowledged

In the order, Commission Chairman T. Sriranga Rao and members M.D. Manohar Raju and Bandaru Krishnaiah acknowledged the prevalent situation. “Recognising the gravity and unprecedented nature of the current situation, the Commission considers it necessary and appropriate to address the hardships being faced by HT consumers — about non-availing of entire load contracted for and the hardship in payment of demand charges,” the order noted.

The Commission was of the view that due to lockdown, the supply conditions do have onerous impact on HT electricity consumers. Since they may not be availing the entire load contracted for during the lockdown, it may be appropriate to allow reduction of load temporarily by relaxing the provisions of GTCS and SoP Regulations for the lockdown period, the regulatory body said.

At the same time, the Commission stated that it was also conscious of the loss that is occasioned to the discoms due to de-rating of contracted load and directed them to submit details of revenue loss on account of this relaxation for examination.

In its May 13 order dismissing the review petition filed by the discoms against the relaxation, the Commission observed that the discoms’ submission was devoid of any merit although they had explained in detail their payment obligations to generation and transmission companies.

What the clauses say

The Clause 5.9.4.2 on reduction in load as part of GTCS stipulates “de-rating of CMD or termination of Agreement in respect of HT Supply. The consumers may seek reduction of CMD after the expiry of minimum period of the agreement by giving not less than one month notice expressing their intention to do so. In case, the consumer chooses to derate the CMD before the expiry of minimum one year period, the CMD will be derated with effect from the date of expiry of the initial one year period of the agreement or after expiry of one month notice period, whichever is later”.

Clause 7.3 of Schedule I of Regulation No.5 of 2016 (Discoms’ Standards of Performance or SoP Regulations) stipulates “reduction in load upon receipt of a request by a consumer for reduction of contract demand/contract load after expiry of minimum period of agreement entered by the consumer with Discom. The Discom shall reduce the contract demand/contract load before the expiry of the second billing cycle after the receipt of such request, provided that consumer executes fresh agreement for such revised load before the second billing cycle”.

What the ERC felt

After going through the data submitted by Discoms on the loss due to relaxations in HT supply conditions, the Commission was of the opinion that the financial impact on account of April 29 order is insignificant and it can be mitigated in the ensuing determination of annual revenue requirement (ARR), as and when it is filed. Moreover, the order was passed in the given circumstances as set out in the order itself and to tide over the difficult situation posed by COVID-19 pandemic.