Press Releases

CERC upholds NTPC PPAs with customers for 37,000 MW

29th Apr, 2013

The Central Electricity Regulatory Commission (CERC) has, in a significant judgement, rejected the petition filed by the Association of Power Producers (AoPP) against the NTPC Limited’s power purchase agreements (PPAs) with customers between October 1, 2010 and January 5, 2011. The CERC order upheld NTPC’s power purchase agreements as valid and within the framework and time permitted.

The CERC order also held that no direction to the CPSU was called for under Section 60 of the Electricity Act, 2003, which refers to market domination by a producer. The CERC did not see any need to refer the AoPP submission to the Competition Commission of India.

The order further boosted the power utility plan to add 37,000 MW by the 13th Plan and supply the electricity so produced to 37 beneficiaries, across the country through PPAs signed during the period.

Twelve power producers, namely Adani Power, AES (India), CLP Power India, Reliance Power, Essar Power, GMR Energy, Tata Power, GVK Gautami Power, Indiabulls Power, Jindal Power, JSW Energy and Lanco Infratech, made a joint petition before the CERC seeking rejection of NTPC’s PPAs signed with its customers during the period from October 1, 2010 to January 5, 2011. The power producers also sought a direction from the electricity regulatory commission to ensure that the Central Utility did not abuse its dominant position as a producer and supplier while entering into such PPAs. The AoPP also sought CERC’s permission to refer the matter to the Competition Commission.

The CERC’s examination of the AoPP complaints took cognizance of the facts that NTPC’s share of the country’s installed power generation capacity was only 19.50 per cent which cannot be considered as market dominant. Secondly, between 2005 and 2011 the PPAs signed by NTPC were of the order of 52,000 MW which were less than (around 50 per cent) the commissioned and under construction capacity by the private players, aggregating at 1,05,000 MW. Therefore, the private producers claim that their operations are affected by NTPC’s PPAs were untenable.

The CERC further observed that CPSUs tariff is determined by the commission as per its terms and conditions giving primacy to consumers’ interest. The PPAs were signed within the framework of the tariff policy and, hence, cannot be termed as anti-competitive. It also noted that foreclosure of upstream markets such as coal, finances, etc are only surmises without support of any hard evidence.

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