The Karnataka Electricity Regulatory Commission (KERC) has issued a suo motu order directing the immediate renewal of Power Purchase Agreements (PPAs) for mini-hydro and wind projects. This move aims to address the long-standing issue of delayed PPA renewals and non-payment for energy fed into the grid. The commission has instructed generators to submit applications for PPA renewal within 90 days before the expiry of their original agreements.
Delays in renewing PPAs have resulted in generators supplying electricity without valid agreements, leading to non-payment for the energy supplied. To resolve this, KERC has introduced a system of deemed approval for renewal agreements. The tariff for the extended period will be fixed at 85% of the 20th year tariff or a negotiated rate, whichever is lower.
The order mandates that Electric Supply Companies (Escoms) must decide before the expiry of the original PPA whether they wish to continue the agreement. If power is required, Escoms must negotiate and execute renewal PPAs for an additional 10 years. If not, they must inform the generator in advance.
Once renewal PPAs are executed, they will be automatically deemed approved by KERC. However, in cases where Escoms fail to act despite timely applications, the PPAs will be considered extended under the commission’s earlier order of March 2024. KERC clarified that while deemed approval ensures continuity, any disputes or errors in renewed agreements will still be subject to final adjudication by the commission.
Escoms are required to submit copies of renewed PPAs to KERC along with applicable fees. This move is expected to bring greater certainty to renewable energy producers and distribution companies, ensuring uninterrupted supply and payment in Karnataka’s power sector.
