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MERC Allows DISCOMs To Procure Renewable Power Through Exchange-Linked Contracts

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MERC Allows DISCOMs To Procure Renewable Power Through Exchange-Linked Contracts

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The Maharashtra Electricity Regulatory Commission (MERC) has ordered three distribution firms (DISCOMs) to find short- and medium-term electricity as quickly as feasible for their base load. 

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A combination of electricity purchases from the Green Day Ahead Market, Green Term Ahead Market, Term Ahead Market, Day-Ahead Market, and Real Time Market was also authorized until the fiscal year 2022–2023. These purchases would be made at exchange-linked prices and would be made bilaterally.

The three deemed DISCOMs, collectively referred to as KRC DISCOMS — Mindspace Business Parks, Gigaplex Estate, and KRC Infrastructure and Projects had submitted a petition asking for authorization to purchase combined power at power exchange-linked rates starting July 2022 until other arrangements could be made.

Earlier, sales of KRC DISCOMs grew as the COVID-19 situation improved and the IT staff gradually returned to the office. They forecasted sales and energy needs for the time period up to July 2023 based on current and anticipated sales.

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Therefore, KRC DISCOMs made the decision to purchase 19 MW of conventional electricity, consisting of 8 MW of peak power in the Maharashtra state perimeter for one year from July 1, 2022, to June 30, 2023, and 11 MW of round-the-clock power.

On April 13, 2022, a reverse auction was held, and RPG Power Trading Company placed the lowest bid of Rs. 6.80/kWh. However, the tender was withdrawn because the price determined through competitive bidding was much higher.

On June 13, 2022, KRC DISCOMs reopened the competitive short-term power procurement procedure for acquiring 14 MW of combined conventional and renewable electricity on a short-term basis for the 12-month period between August 1, 2022, and July 31, 2023. 

PPAs were signed between DISCOMs and Kreate Energy between July 1, 2021, and June 30, 2022. However, Kreate Energy did not start providing power to KRC DISCOMs until April 2022. 

Hence, The only practical alternative accessible to KRC DISCOMs in the absence of any tied-up PPA was to purchase the necessary electricity from the power exchanges. Then, at the exchange-linked price, KRC DISCOMs and GMR Energy Trading engaged in a bilateral power contract.

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The Commission noted that Kreate Energy’s failure to deliver electricity and the unsuccessful bid procedure had forced KRC DISCOMs to turn to power exchanges. 

In order to guarantee supply continuity, KRC DISCOMs, and GMR Energy Trading engaged in a bilateral power agreement at an exchange-linked price.

The state regulator continued, saying that under normal circumstances, such a deal would not have been permitted and was not advised. However, the recent power exchange price discoveries were much higher than the average power purchase rate of Rs. 3.92/kWh allowed in the multi-year tariff orders of KRC DISCOMs. 

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