The Union power ministry has given the freedom to power distribution companies to discontinue or continue drawing power from a power generation plant that has completed 25 years of operation.
According to a reliable media report, the Union power ministry has sent a missive to state governments and heads of Central generating stations, stating that discoms are eligible to terminate the entire allocated power from a power project that has completed 25 years of operations since its commissioning.
Can continue
Discoms, if so they so wish, may also continue to draw power from such old power stations, exercising the first right of refusal available to them under the terms of long-term PPAs. However, PPAs cannot be extended for a period exceeding five years.
Impact
The changes can help discoms terminate an old PPA that has not remained economical in terms of power tariff. Also, termination of PPAs may allow shutting down operations of old and polluting power stations. Over the years, power tariffs have fallen significantly, thanks to cheaper sources like solar and wind. Besides, discoms are making very cost-effective short-term purchases through energy exchanges.
Termination in full
The power ministry has specified that if a discom chooses to terminate a PPA, the entire quantity of power envisaged in the PPA must be relinquished. Termination will not be allowed in parts.
Re-routing relinquished power
Power generation stations that stand to lose on contracted capacity can seek alternative modes like selling on power exchanges, tie-ups with other buyers, etc.
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