EXTRAORDINARY

III-         4

PART III-Section 4

PUBLISHED BY AUTHORITY

No. 248                                         NEW DELHI, THURSDAY, SEPTEMBER 30, 2010

CENTRAL ELECTRICITY REGULATORY COMMISSION NEW DELHI

No. L-1/42/2010-CERC                                                           Dated: 28th September, 2010

NOTIFICATION

In exercise of powers conferred under Section 178 of the Electricity Act, 2003 (36 of 2003) and all other powers enabling it in this behalf and after previous publication, the Central Electricity Regulatory Commission hereby makes the following regulations, namely:-

CHAPTER I GENERAL

1. Short title and commencement

(1)                          These    regulations    shall    be    called     the    Central    Electricity     Regulatory Commission (Regulation of Power Supply) Regulations, 2010.

(2)                       These     regulations     shall     come     into     force     from     the     date     of     their publication in the Official Gazette.

2.  Definitions

(1)                     In these regulations, unless the context otherwise requires:

a)           "Act" means the  Electricity  Act,  2003  (36  of  2003),  including  amendments thereto;

b)          “Agreement" means the  power  purchase  agreement  between  the  Beneficiary and the Generating Company which owns the generating stations or the bulk power transmission agreement between the Beneficiary and the Transmission Licensee, as the case may be, or such other agreements by whatever name called binding the Generating Company/Transmission Licensee and their Beneficiaries;

c)           "Beneficiary" means the person who has been allocated electricity or is being supplied electricity generated from a generating station through long-term access or medium–term open access or who is a user of the transmission  system of a transmission licensee, as the case may be;

d)          "Commission" means the Central Electricity Regulatory Commission referred to in Section 76 of the Act;

e)           "Defaulting entity" means a beneficiary having outstanding dues of a generating company or a transmission licensee or not maintaining the required Letter of Credit or any other agreed Payment Security Mechanism in terms of the Agreement;

f)            “Default Trigger Date” means the date from which the default in payment or default in maintaining Letter of Credit or any other agreed Payment Security Mechanism has been established.

Explanation I:- In case of non payment of dues, this date shall be the next working day after completion of the 60 days period from the date of service of the bill by the generating company or the transmission licensee as the case may be.

Explanation II:- In case of non maintenance of the required Letter of Credit or any other agreed Payment Security Mechanism, the Default Trigger Date shall be third working day after the payment security mechanism, as per the Agreement, ceases to exist.;

g)          “Load  Despatch  Centre”  means  Regional  Load   Despatch   Centre   or   State Load Despatch Centre, as the case may be.

h)          "Outstanding dues" means the dues of a generating company or of a transmission licensee, which remains unpaid beyond a period of 60 days from the date of service of the bill on the beneficiaries;

i)            "Regulating entity" means the generating company or the transmission  licensee, as the case may be, within the jurisdiction of the Commission, which notifies the Regional Load Despatch Centre or the State Load Despatch Centre, to regulate the power supply of the defaulting entity;

j)            “Regulated Entity” means the defaulting entity whose power supply is regulated in accordance with these Regulations;

k)          “User” means a person such as a Generating Company including Captive Generating Plant or Transmission Licensee ( other than the Central Transmission Utility and State Transmission utility) or Distribution Licensee or Bulk Consumer, whose electrical plant is connected to the ISTS at a voltage level 33kV and above;

(2)         Save as aforesaid and unless repugnant to the context or if the subject matter otherwise requires, words and expressions used and not defined herein, but defined in the Act shall have the meanings as assigned to them under the Act.

1. Scope and Applicability: These Regulations shall be applicable to the generating station and the transmission system where there is a specific provision in the Agreement between the Beneficiaries and Generating Company or the Transmission Licensee as the case may be, for regulation of power supply in case of non-payment of outstanding dues or non-maintenance of Letter of Credit or any other agreed Payment Security  Mechanism.

CHAPTER II

PROCEDURE FOR REGULATION OF POWER SUPPLY

1. [In]1 case of the outstanding dues or in case the required Letter of Credit or any other agreed Payment Security Mechanism is not maintained as per the Agreement, the generating company or the transmission licensee, as the case may be, may serve a notice for regulation of power supply, on the Defaulting Entity, for reducing the drawl schedule in the case of the generating company or with-drawl of open access/access to Inter   State

1 Amended vide Corrigendum dated 6.9.2011

Transmission System in the case of the transmission licensee.. Such notice may be served on or after the default trigger date and shall include the following details:

(a)     The amount of  outstanding  dues  against  the  Defaulting  Entity  or  the  duration of non-maintenance of Letter  of  Credit  or  any  other  agreed  Payment  Security Mechanism, as the case may be;

(b)    Quantum  and  duration  of  reduction   in   drawl   schedule   of   Defaulting  Entity  in  case  the  Regulating  Entity  is  a  Generating  company  or  the  quantum    and  duration  of  denial   of   medium-term   open   access   and/or   long-term   access,  as the case may be, in case the Regulating Entity is a Transmission licensee;

Provided that in case the Regulating Entity is a Generating company, such notice shall also include the following additional details:

(i)       Source(s) of power from which reduction/diversion is to be made in case of regulation of power supply and quantum alongwith duration of reduction of drawl schedule/ diversion of power from each of them ; and

(ii)       Whether reduction of drawl schedule of Defaulting Entity is likely to cause reduction in generation or the excess power available consequent to regulation is to be sold to any other entity, whether directly or through trader; and

(iii)       In case of diversion of power, the particulars of the person to whom power is to be diverted and the price agreed to be charged from such person, if determined in advance.

Provided further that in case of sale through Power Exchange or otherwise, the price may be intimated as and when such price is discovered.

Provided further that where the Regulating Entity is a Transmission Licensee, such notice shall also include the transmission line or the transmission corridor on which medium- term open access and / or long-term access to the defaulting Entity is to be restricted, in consultation with the Regional Load Despatch Centre/s in whose control area the transmission line or transmission corridor is located and the source of power, preferably the cheapest power station in that corridor from which schedule is to be restricted by Regional Load Despatch Centre/State Load Despatch Centre.

1. A copy of the notice under Regulation 4 shall be forwarded by the Regulating Entity to the Regional Load Despatch Centre or State Load Despatch Centre in whose control area (s) the Regulating Entity is situated with a request to prepare implementation plan. Copies of the notice shall also be served on other concerned Regional Load Despatch Centres, State Load Despatch Centres, Regional Power Committees.

Provided that the notice and request for preparing implementation plan of regulation of power supply shall be served on the Defaulting Entity, concerned Regional Load Despatch Centre, State Load Despatch Centre, and Regional Power Committee and shall also be posted on the website of the Regulating Entity at least three (3) days in advance  of the proposed date of commencement of regulation of power supply.

Provided further that the Regulating Entity shall undertake to indemnify, defend and save concerned Regional Load Despatch Centre/State Load Despatch centre and hold them harmless from any and all damages, losses, claims and actions, demands, suits, recoveries, cost and expenses, court cost, attorney fees, and all other obligations by or to third parties arising out of or resulting from the regulation of power under these regulations.

1. Upon  receipt  of  the  notice  under  Regulation  4  and  within  3   days   thereafter,      the      concerned      State      Load      Despatch      Centre/Regional    Load

Despatch Centre, in whose control area the [Regulating Entity]2 is situated, shall make a plan   in   writing   for   implementing   the   regulation    of    power    supply    and    shall inform  the  Regulating  Entity,  Regulated  Entity,  concerned  State  Load  Despatch    Centres,    Regional    Power    Committees,    and    Regional    Load Despatch  Centres  of  the  said  Plan  and  shall  post  the  implementation  plan  on       its website.

Provided that if in the opinion of the concerned Regional Load Despatch Centre or State Load Despatch Centre, as the case may be, the proposal for regulation of power supply made by the Regulating Entity cannot be carried out under the prevailing system conditions, then it shall inform the Regulating Entity of its decision in writing and the basis for such decision within three (3) days of receipt of the notice under Regulation 4, along with the expected date from which regulation can be implemented.

1. The  plan  for  implementation  shall  be  prepared  by   concerned   Regional   Load  Despatch  Centre   or   State   Load   Despatch   Centre,   as   the   case   may   be,  in such manner that the  amount  of  reduction  in  drawl  schedule  shall  be  progressively increased in quantum in accordance with the notice given by the  Regulating Entity. Such progressive increase shall be in accordance  with  the  Agreement, if so mentioned in the Agreement.

Provided that for each case of additional regulation of power supply, a three (3) days advance notice, under Regulation 4 shall be given , in writing before actual implementation.

1. The regulation of power supply for  the  Regulating  Entity  shall  be  implemented from the fourth day of the notice as per plan prepared by the Regional Load Despatch Centre/State Load Despatch Centre unless the Regulating Entity requests cancellation of the regulation of power supply.

2 Amended vide Corrigendum dated 05.09.2011

1. In case the Regulating Entity decides to withdraw or postpone the regulation of power supply, it shall communicate its decision in writing to the concerned Regional Load Despatch Centre or State Load Despatch Centre, as the case may be, and the Defaulting Entity, along with reasons thereof.

Provided that the communication for withdrawal /postponement of the regulation of power supply shall be given at least two days prior to the day of withdrawl or postponement of such regulation.

Provided further that Regulating Entity shall communicate the time and date of withdrawal of regulation of power supply, keeping in view that the regulation of power supply has to be withdrawn immediately after the outstanding dues are recovered.

1. Where the Regulated Entity has defaulted in making  payment  to  both  Generating  Company  and   Transmission   Licensee,   the   regulation   of   power  supply  on  the  Regulated  Entity  for  these  defaults  shall  be  implemented concurrently.  The  adjustment  towards  the  Outstanding  Dues  shall   be   in   accordance with Regulation 17 of these regulations.

1. (1)  During  the  period  of  regulation  of  power  supply,  the   Regulated   Entity shall  restrict  its  drawal  to  the  revised  schedule  given  by  the   Load   Despatch Centre  and  the  deviations,  if  any,  from  the  drawal  schedule  shall  be  subjected      to   unscheduled   inter-change   charges   in   accordance   with   the   Central    Electricity   Regulatory   Commission   (Unscheduled   Interchange    charges    and related matters) Regulations, 2009 as amended from time to time.

(2)       The Regional Load Despatch Centre or State Load Despatch Centre, as the case may be, during the period of regulation of power supply, shall consider the regulation of  power  supply  taking  into  consideration  grid  security,  and  may  temporarily   suspend

implementation of the plan of regulation of power supply, if in its opinion, grid security  is in imminent danger.

(3)          The concerned Regional Load Despatch Centre shall keep Member-Secretary, Regional Power Committee of the region informed of the implementation of the regulation of power supply.

CHAPTER III

REGULATION BY GENERATING COMPANY

1. (1) The generating company shall be entitled to sell the power rendered surplus due to regulation of power supply, to any person, including any of the existing beneficiaries, during the regulation of power supply, subject to grid security, as ascertained by the concerned Regional Load Despatch Centre, or may reduce generation in case any of the above options is not possible. The Generating Company shall inform the Regional Load Despatch Centre or the State Load Despatch Centre, as the case may be, the Defaulting Entity and Member-Secretary, Regional Power Committee of the region, of the quantum, duration and rate of such sale.

Provided that, unless the Agreement otherwise provides, the liability to pay the capacity charges of the generating station, in respect of which the schedule has been restricted, shall be of the Regulated Entity.

(2) Open access in case of diversion of power shall be regulated in accordance with the Central Electricity Regulatory Commission (Open Access in Inter-State Transmission) Regulations, 2009 and Central Electricity Regulatory Commission (Grant of Connectivity, Long-Term Access and Medium-Term Open Access to the inter-State Transmission and related matters) Regulations, 2009, as amended from time to time.

1. The amount received from sale of surplus power by generating company due to regulation  of  power  supply,  shall  be  adjusted  against  the  outstanding  dues  of     the

Regulated Entity, after deduction of energy charges, trading margin and other incidental expenses borne by the Generating Company, if any, and the remaining amount, if any, shall be passed on to the Regulated Entity. As mentioned in Regulation 9 above, the regulation of power supply shall be withdrawn as soon as outstanding dues are recovered.

1. During  regulation  of   power   supply,   through   a   hydro   generating   station, in  order  to  avoid  spillage  of  water,  if  a  buyer  cannot  be  found  or  is  not  found  for  the  full  quantum  of  power  rendered  surplus,   the   generating   station   can   inject   power   under   Unscheduled   Interchange   (UI)   mechanism,   if   grid  conditions allow, with the permission  of  the  Regional  Load  Despatch  Centre  in  which  it  is  located,  subject  to  the  stipulations  in  the  Central   Electricity   Regulatory    Commission,(Unscheduled    Interchange     charges     and     related matters) Regulations, 2009, as amended from  time  to  time.  The  loss  of  energy  charge,  in  case  of  spillage  of  water,  shall  be  made  good   from   the   revenue earned  through  sale  of  power  and/or  UI  from  injection  of   power   rendered   surplus  due  to  regulation,  on  first  charge,  and  the  balance  amount  shall  be  adjusted in accordance with Regulation 13.

CHAPTER IV

REGULATION BY TRANSMISSION LICENSEE

1. On  the  request  of  a  Transmission  Licensee  for  Regulating  the  power   supply,  the  Regional  Load  Despatch  Centre  may,  under  intimation  to  the  concerned  generating  company,  curtail  the  medium-term   open   access   or   long-term access of the allocated  power  or  power  supply  contracted  by  the  Defaulting  Entity,  on  account  of  regulation   according   to   the   notice   served   under  Regulation  4  of  these   regulations,   preferably   from   the   cheapest   generating   station   in   that   corridor.   The   Regulating    Transmission    Licensee  may decide the quantum and duration  of  denial  of  open  access/  access  in  consultation   with   any   of   the   concerned   generating   companies   who   have         a

contract  to  sell  power  to  the  Regulated   Entity   and   the   concerned   Regional   Load  Despatch  Centre.  The  Transmission  Licensee   can   propose   the   quantum   and duration of regulation of power supply based on an estimated price, indications of which can be taken from the Power Exchange Uniform Market Clearing Price and the prevailing price of electricity sold through traders directly.

1. The  generating  company,  as  a   result   of   reduction   of   open   access   shall be  entitled  to  sell  the  power  rendered  surplus  due  to   regulation   of   power   supply, to any person including  any  of  the  existing  beneficiaries,  during  the  regulation  of  power  supply.  The  revenue  received  on  account  of  sale  of  this  power shall be utilised in following sequence:

a)         to pay the energy charges and any incidental expenses, including trading margin if power is sold through a trader, of the generating company;

b)        to pay the outstanding dues of the transmission licensee;

c)         any remaining amount to be passed on to Regulated Entity.

1. In case of such reduction of drawl schedule,  the  liability  of  payment  of  capacity  charges  for  its  original  share  in   the   generating   station   shall   remain  with the Regulated Entity.

1. During  regulation  of  power  supply,  through  a  hydro  generating  station,      in  order  to  avoid  spillage  of  water,  if  a  buyer  cannot  be  found  or  is  not  found  for  the  full  quantum  of  power  rendered  surplus,   the   generating   station   can   inject   power   under   Unscheduled   Interchange   (UI)   mechanism,   if   grid  conditions allow, with the permission  of  the  Regional  Load  Despatch  Centre  in  which  it  is  located,  subject  to  the  stipulations  in  the  Central   Electricity   Regulatory    Commission,(Unscheduled    Interchange     charges     and     related matters) Regulations, 2009, as amended from  time  to  time.  The  loss  of  energy  charge,  in  case  of  spillage  of  water,  shall  be  made  good   from   the   revenue earned   through   sale   of   power   and/or   UI   from   injection   of   power       rendered