Lok Sabha Question No. 711 (UNSTARRED), answered on 2019-11-21
Subject: Renewable Energy Dispute
Ministry: NEW AND RENEWABLE ENERGY
Asked by: Srinivas Kesineni

## GOVERNMENT OF INDIA MINISTRY OF NEW AND RENEWABLE ENERGY

## LOK SABHA UNSTARRED QUESTION NO. 711

TO BE ANSWERED ON 21.11.2019

## RENEWABLE ENERGY DISPUTE

## 711. SHRI KESINENI SRINIVAS

Will the Minister of NEW AND RENEWABLE ENERGY be pleased to state

- (a) the details of the ongoing renewable energy dispute between Andhra Pradesh and the Union Government;
- (b) the status of the payment security mechanism in Andhra Pradesh in light of the recent Vijayawada High Court stay order against the Union Government's proceedings against DISCOMs in Andhra Pradesh;
- (c) whether the Union Government proposes to ban solar and wind energy developers from procuring power from exchanges in Andhra Pradesh if the State utilities do not issue Letter of Credits to wind and solar developers; and
- (d)  if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE (I/C) FOR NEW & RENEWABLE ENERGY,  POWER and MoS for  SKILL DEVELOPMENT AND ENTREPRENEURSHIP

(SHRI R. K. SINGH)

(a) to (d): Andhra Pradesh utilities (DISCOMs) had not been making payments to Renewable Energy  (Wind  and  Solar)  generators  for  over  one  year.  The  State  Government  of  Andhra Pradesh had constituted a 'High Level Negotiation Committee for PPAs' (HLNC) to 'review, negotiate and bring down the high wind and solar energy purchase prices' vide G.O.R.T No. 63 dated 01.07.2019. Subsequently, AP DISCOMs ( APSPDCL ) had directed solar and wind developers to reduce the tariff to Rs. 2.43/ unit and to submit the revised / reduced monthly power supply bills. This Committee's constitution was set aside by the Hon'ble High Court. Further, instances of abrupt disconnection of wind power plants from substation (state grid) and irregular curtailment of power have been reported by the Renewable Energy Generators from the State of Andhra Pradesh.

The Ministry of New & Renewable Energy (MNRE) had advised the State Government of Andhra Pradesh that the contractual agreements are sacrosanct and should not to be revisited unless there is a specific provision to do so in the agreement or a case of malafide/ corruption has been established. The state DISCOMs were also requested to honour PPAs and 'Must Run' status accorded to wind and solar power projects, as per provisions of Indian Electricity Grid Code 2010.

In the above matter, the Renewable Energy generators approached the Hon'ble High Court of Andhra Pradesh to set aside the Government of Andhra Pradesh's and DISCOMs relevant orders.  The  Hon'ble  High  Court  of  Andhra  Pradesh  passed  an  order  (matter  batch  WP 9844/2019), the relevant part of which is reproduced as under:

'The Court is of the opinion that the terms of the contract have to be honoured. The State cannot give a direction to the DISCOMS or to the generators that the price is high. The matter of 'price' has to be determined as per law. Until it is determined that the price is high or for similarly determined reasons by which the contract is amended, the curtailment of the power for any reason whatsoever cannot be ordered, except for the reasons which are mentioned in the PPA or as per the Electricity Regulation Act, 2003, etc., curtailment cannot be ordered either directly or indirectly.'

'The Court is of the opinion that the respondents / DISCOMS should be directed to honour the bills of the wind purchasers and solar purchasers and to pay the same at 'interim' rate of Rs. 2.44p for solar power and Rs. 2.43p for wind power. All the pending and future bills of all the petitioners should be paid at this interim rate.'

With  regards  to  abrupt  disconnection  of  wind  power,  the  Hon'ble  High  Court  of  Andhra Pradesh, passed the following order (relavant order is reproduced):

'This court is  directing  the  respondents  to  restore  the  last  uncontested  position/  status  quo ante and directing the APTRANSCO to immediately reconnect the applicants' wind power project to the state grid at the approved temporary connection point (Borampalli Substation) and allow the petitioners to continue to supply power to APSPDCL as before.'

Despite above orders of the Hon'ble High Court of Andhra Pradesh, payments to Renewable Energy Generators have not been made.  Instead State Government of Andhra Pradesh has filed  Writ  Appeal  in  division  bench  against  the  Hon'ble  High  Court's  orders  in  the  above matters.

Noting  the  delayed  payments  to  power  generators  (including  Renewable  Power)  in  many states, the Ministry of Power (MoP), vide its Order No. 23/22/2019-R&R dated 28.06.2019 and subsequent corrigendum / clarifications dated 17.7.2019 and 23.7.2019, issued directions to  ensure opening and maintaining of adequate Letters of Credit (LC) as payment security mechanism where the provisions are there to do so in power purchase agreements (PPA)  by the distribution licensees. Despite provisions in PPA, LCs were not opened and there were large  outstanding  dues  on  account  of  unpaid  power  bills.  The  above  order  directed  load despatch  centres  to  implement  the  existing  LC  provision  of  PPA  strictly  and  restrict  the regulated entity to procure power from the power exchanges and Short Term Open Access (STOA)  where  the  said  provision  was  not  being  adhered  to.    MNRE,  vide  its  letter  No. 336/19/2017-Wind-Part (I) dated 06.09.2019 requested Power System Operation Corporation (POSOCO)  to  issue  necessary  directions  to  RLDCs/SLDCs  as  per  MoPs  order  dated 28.06.2019.

Andhra  Pradesh  DISCOMSs  (Southern  Power  Distribution  Company  of  Andhra  Pradesh Limited and Eastern Power Distribution company of Andhra Pradesh Limited) have filed a Writ  Petition  in  the  Hon'ble  High  Court  of  Andhra  Pradesh  against  Ministry  of  Power, Ministry of New & Renewable Energy and POSOCO in this matter. The Hon'ble High Court of Andhra Pradesh, on 15.10.2019, has passed the following interim order (relevant portion of order is reproduced):

'There shall be an interim order as prayed for, restraining the Respondents from disallowing the power transactions under the STOA or through the power exchange.'

The Government of India has filed counter affidavit in this matter, and the issue is in Court.

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