States free to supply coal to power plants

New Delhi: The power ministry has finally framed new rules to get electricity supply from independent power producers in lieu of dry fuel, which is aimed at offering more freedom to states to use their allocated coal.

The new arrangement will replace the rigid practice of allocation of coal to state-owned generation plants. The decision to give more freedom to states to use coal assigned to them was taken in a Union Cabinet meeting last year in May.

"In continuation of the ministry's letter dated June 2016 wherein it was suggested that the methodology for use of transferred coal in independent power producer (IPP) generating stations will be done separately, the same has now been finalised after detailed discussion with all the stakeholders to bring in further efficiency in utilisation of domestic coal.

According to the new rules, the energy generated under this arrangement will be treated as transfer of coal. It is provided that the landed cost of power from IPP generating station at the buyer's periphery should be lower than the variable cost of the state generating station whose power is to be replaced by that of IPP.

The landed cost of power shall be inclusive of the transmission charges and losses. Under this arrangement, the IPP will make its own assessment about the availability of transmission corridor for the quantum of power offered and the period of supply before submitting price bids during e-reverse bidding.

The rules provide that any restriction imposed by RLDCs/SLDCs (regional/states load dispatch centres) on scheduling of power due to breakdown of transmission and grid constraints shall be treated as force majeure without any liability on either side.

The force majeure also includes any of the events or circumstances, or combination of events and circumstances such as act of God, exceptionally-adverse weather conditions, lightning, flood, cyclone, earthquake, volcanic eruption, fire or landslide or acts of terrorism causing disruption of the system.

It said the contracted power will be treated as deemed reduced for the period of transmission constraint. The non- or part-availability of transmission corridor should be certified by the RLDC and SLDC concerned. During the force majeure, no coal transfer shall be made to the seller, the new rules stipulated.