India Introduces Amendments to Electricity Regulations to Tackle Late Payments

The Ministry of Power, Government of India, has recently announced amendments to the Electricity (Late Payment Surcharge and Related Matters) Rules of 2022, through a notification published in New Delhi on February 28, 2024. The amendments, known as the Electricity (Late Payment Surcharge and Related Matters) (Amendment) Rules, 2024, are set to be implemented immediately upon their publication in the Official Gazette.

Significant changes have been made to Rule 7 of the existing rules, introducing stricter regulations on the access to the sale and purchase of electricity. These modifications specify that access, including any previously approved access for short-term contracts or power exchange, will be strictly regulated. However, the National Load Despatch Centre (NLDC) retains the authority to temporarily adjust these regulations in exceptional circumstances for grid security, provided the reasons are documented in writing.

Further adjustments include the imposition of a ten percent regulation on access for sale and purchase of electricity through contracts other than short-term contracts, if dues remain unpaid for more than three and a half months. This regulation will increase progressively by ten percent for each month of default. Once outstanding dues are cleared, the regulation of access will be lifted within one day, excluding the day of payment.

The NLDC is tasked with issuing detailed procedures for implementing these access regulations. Additionally, in cases of drawl schedule reduction, the liable entity must continue to pay capacity and interstate transmission charges.

Moreover, Rule 9 has been amended to require distribution licensees to notify their power requisition schedule to generating companies at least two hours before the deadline for proposals or bids in the day-ahead market. Un-requisitioned surplus power must then be offered in the power exchange, with specific provisions regarding pricing and the offering of surplus power in other market segments.

These amendments aim to enhance the efficiency and reliability of the electricity market, ensuring that transactions are conducted smoothly and financial obligations are met timely.