The Central Electricity Regulatory Commission (CERC) on April 3, 2020, ordered reduction in late payment surcharge (LPS) payable by discoms to generation and transmission companies to 1 per cent per month from the earlier 1.5 per cent, for delayed clearance of dues. The move comes in the wake of the Coronavirus lockdown.
Power generation companies (gencos) and transmission utilities (transcos) charge LPS from discoms for delayed payments of bills beyond 45 days.
“If any delayed payment by the distribution companies to the generating companies and inter-state transmission licensees beyond 45 days from the date of the presentation of the bills falls between 24.03.2020 and 30.06.2020, the concerned distribution companies shall make the payment with LPS at the reduced rate of 12 per cent per annum that translates into 1 per cent per month,” the CERC order said.
Commenting on the order, Pratik Agarwal, Managing Director, Sterlite Power, said, “ As the nation grapples with the impact of Covid – 19, the CERC order is a welcome move as it announces no moratorium on monthly tariff payments due to Genco’s and Transco’s. This will ensure smooth functioning of the entire power sector, and avoid liquidity issues at this important hour where grid security is of utmost importance. The reduction in late payment surcharge from 1.5% per month to 1.0% per month will provide much needed relief to DISCOMS. We are thankful to CERC for considering the financial sustainability of the entire power sector value chain, and bring out a balanced order during these trying times.”
Earlier on March 28, the Ministry of Power had issued directions to the CERC to provide a moratorium of three months to discoms to make payments to generating companies and transmission licencees and not to levy penal rates of LPS.
The ministry had also asked state governments to issue similar directions to state electricity regulatory commissions.
The ministry had pointed out in its statement that due to the lockdown, consumers are unable to pay their dues to the discoms.
This has affected the liquidity position of the discoms thereby impairing their ability to pay to the generating and transmission companies, it had said.
The cut in LPS will be applicable on gencos and transmission utilities which have signed cost-plus basis agreements with discoms. In these cases tariff is decided by power regulator on basis of estimates submitted by the gencos.
In a statement, Harsh Shah, CEO, IndiGrid, observed: “In context of the COVID – 19 pandemic, a continuous availability of electricity is paramount so as to not disrupt the public life as well as health care services. We wholeheartedly support MOP’s decision of to keep the generation, transmission and distribution of electricity operational in full swing. Power transmission is a must run service irrespective of lower energy load. Unlike generation, power transmission needs to deliver 24×7 availability to ensure reliable electricity. Therefore, continuity of tariff payments is essential for must run services like transmission. We welcome MoP’s directives and CERC’s circular which reduces late payment surcharge from 18% to 12% in these trying times for consumers while ensuring no moratorium is provided. We remain committed to ensure that our network across 13 states in India would support uninterrupted power supply.”
