UPERC Reviews 1000 MW Solar Power Dispute ₹0.07 Margin And Documentation Issues To be Resolved

In a recent hearing concerning the procurement of 1,000 MW of solar power under the Power Supply Agreement (PSA) dated February 7, 2024, the commission had previously admitted the petition and permitted all parties to submit their respective replies and rejoinders. The Solar Energy Corporation of India (SECI) was specifically directed to clarify the jurisdiction for applying a trading margin of 7 paise per unit. Additionally, the Uttar Pradesh Power Corporation Limited (UPPCL) was instructed to provide a complete copy of the Power Purchase Agreement (PPA) associated with the PSA.

During the latest hearing, SECI informed the commission that it had submitted its reply earlier that day and apologized for the delay. The commission questioned SECI about the justification for the trading margin. SECI stated that the margin of ₹0.07 per unit was following the Ministry of Power’s guidelines. However, the commission observed that charging such a margin seemed unjustified. This was because SECI, acting as an intermediary procurer, was providing a payment security mechanism (PSM) to the solar project developer under the PPA, but was receiving a similar PSM from the end procurer, i.e., UPPCL, under the PSA. This arrangement significantly mitigated SECI’s financial risk.

UPPCL responded by stating that the PSA was signed following the bidding process conducted by SECI, as per the guidelines. High-level discussions were held between SECI and UPPCL to negotiate the trading margin rate. SECI, however, refused to lower the margin below 7 paise per unit. UPPCL, constrained by the renewable purchase obligation (RPO) requirements of the discoms, had to accept the margin proposed by SECI. UPPCL requested additional time for further discussions with its management and SECI to potentially resolve the trading margin issue amicably.

The commission, after hearing the arguments, granted the parties a two-week period to reach an amicable resolution regarding the trading margin. UPPCL was also given a final opportunity to file the complete copy of the PPA linked to the PSA dated February 7, 2024. The matter has been scheduled for the next hearing on September 5, 2024.