CERC Approves Deviations For 500 MW PSP Project Between Madhya Pradesh And Uttar Pradesh

The Central Electricity Regulatory Commission (CERC) has issued an important order on a joint petition filed by Madhya Pradesh Power Management Company Limited (MPPMCL) and Uttar Pradesh Power Corporation Limited (UPPCL). The petition was related to a proposed 500 MW Pumped Storage Plant (PSP) and sought approval for certain changes from the Standard Bidding Guidelines followed at the national level. The project is considered unique because it introduces a new way for two states to share energy storage based on their seasonal needs.

The idea behind the project is based on what the states call a “complementary demand” model. Madhya Pradesh requires energy storage mainly during the Rabi season, which runs from November to April. On the other hand, Uttar Pradesh faces higher demand from May to October. Instead of building separate facilities, both states plan to share a single 500 MW storage project for a period of 40 years. This approach is expected to help both states manage peak power demand more efficiently while also reducing overall electricity procurement costs for consumers.

The CERC carefully reviewed the changes requested by the two utilities and approved them, considering the complexity and risks involved in such a project. One of the key approvals was related to timelines. Normally, developers must approach the Commission within 30 days for tariff adoption after receiving the Letter of Award. However, in this case, the timeline has been extended to 60 days to allow better coordination between the two states.

Another important change relates to financial security. While standard rules allow different forms of security, such as insurance bonds, the petitioners proposed allowing only Bank Guarantees. The Commission agreed with this stricter approach, stating that it would ensure better financial discipline and reduce the chances of non-serious bidders participating in the process.

The Commission also addressed construction-related risks. Pumped storage projects often face geological uncertainties, which can delay execution. Instead of cancelling the contract after a six-month delay, developers will now be given more flexibility. They can complete the project within a longer period of up to 10 years, but they will have to pay higher penalties for delays.

In terms of performance, the penalty structure has also been revised. Instead of a fixed penalty based on tariff, it will now be linked to the Annual Fixed Charge, making it more practical and project-specific.

The order also keeps strict rules for bidder conduct. Companies providing false information or withdrawing bids without valid reasons may face blacklisting or debarment.

CERC confirmed that it has the authority to review the case because it involves more than one state, making it a composite scheme. The Commission clarified that it only approves deviations in the bidding process, not the entire tender. Overall, the decision supports innovation and cooperation in the power sector and clears the way for the bidding process to begin.