Electricity Sector

August 19, 2022
Posted by: OptimizeIAS Team
Category: DPN Topics

Electricity Sector

Subject: Economy

Power System Operation Corporation Ltd (POSOCO) has asked three power exchanges — IEX, PXIL and HPX — to restrict electricity trading by 27 discoms in 13 states having outstanding dues as per the information available on the PRAAPTI portal.

Details:

The action appears to be taken under the Electricity (Late Payment Surcharge and related matters), Rules 2022

Concept:

Power System Operation Corporation Ltd (POSOCO)

POSOCO, a public sector enterprise under the Union power ministry manages integrated operation of the Indian power system.
It is responsible to monitor and ensure round the clock integrated operation of the Indian Power System in a reliable, efficient and secure manner thus serving a mission critical activity.
It consists of 5 Regional Load Despatch Centres (RLDCs) and the National Load Despatch Centre (NLDC).
It was earlier a wholly owned subsidiary of Power Grid Corporation of India Limited (Powergrid).
It was formed in March 2009 to handle the power management functions of PGCIL.
The subsidiary was eventually made a separate company, leaving the parent firm with only the task of setting up transmission links.
- The load despatch functions, earlier handled by PGCIL, have now come up to POSOCO

Electricity (Late Payment Surcharge and related matters), Rules 2022

These rules shall be applicable to outstanding dues of generating companies, inter-state transmission licensees and electricity trading licensees.
It states a distribution licensee or other user of the transmission system, as the case may be, shall maintain unconditional, irrevocable and adequate payment security mechanisms.
Non-payment of dues will result in the obligation of the generator company to supply power at 75% of contracted power to the distribution licencee. The remaining 25% of contracted power may be sold by the generating company through power exchanges.
State utilities can be barred from trading on electricity exchanges for non-payment of dues and other charges to gencos.
Late Payment Surcharge shall be payable on the payment outstanding after the due date at the base rate of Late Payment Surcharge applicable for the period for the first month of default.
- Late payment surcharge refers to the charges payable by a distribution company (DISCOM) to a generating company or electricity trader for power procured or by a user of a transmission system to a transmission licensee on account of a delay in payment of monthly charges beyond the due date.
Rate of Late Payment Surcharge for the successive months of default shall increase by 0.5 percent for every month of delay provided that the Late Payment Surcharge shall not be more than three percent higher than the base rate at any time.