CERC rejects CESC's 300 MW hybrid power tariff bid over procedural lapses

Time of India

8 hours ago

The Central
Electricity Regulatory Commission
(CERC) has rejected a petition by
CESC Ltd
seeking approval for the adoption of tariff for the long-term procurement of 300 MW power from grid-connected wind-solar hybrid projects, citing non-compliance with competitive bidding guidelines.
The power utility had failed to obtain prior approval for deviations in the bidding process from the appropriate authority, which in this case should have been the Centre and not the West Bengal government, the CERC said in its report.
CESC sought to adopt a tariff of Rs 3.81 per kWh for the hybrid power procurement.
"We reject the adoption of the tariff so discovered, as the petitioner has not complied with the bidding guidelines under Section 63 of the Electricity Act. The petitioner may go for re-bidding, if so advised, strictly in accordance with the guidelines issued under Section 63 of the Act," the CERC said in the order.
CESC had floated the tender on November 8, 2024, for procuring 150 MW wind-solar hybrid power with a greenshoe option for an additional 150 MW, aiming to meet its
renewable purchase obligations
. The project was proposed to be located in Mandsaur in Madhya Pradesh.
The final tariff was discovered through competitive bidding and an e-reverse auction conducted on December 27, 2024. Purvah Green Power Pvt Ltd, a subsidiary of CESC, emerged as the successful bidder for the entire 300 MW capacity.
CESC did not respond to requests for comments till the time of filing of this report.
The Commission noted that despite being aware from a previous case (Petition No. 365/AT/2024) that approval for deviations in inter-state transmission system (ISTS)-connected projects must be obtained from the central government, CESC proceeded with approvals from the West Bengal government.
The Commission also observed that CESC had misled the state government by not disclosing the ISTS nature of the project and continued the tender process despite being aware of the requirement to approach the Centre.
"The Commission had condoned this requirement once as an exception, but cannot make the exception a rule," the order said, referring to a previous instance where similar deviations were allowed in view of exigencies.
"Acceptance of the petitioner's prayers in the instant petition would not be in consonance with the principles as contained in Section 63 of the Electricity Act, 2003," it added.
CESC defended the higher-than-average tariff by citing two key advantages in the winning bid. First, the project promised a higher Capacity Utilisation Factor (CUF) of 50 per cent, well above the usual 30 per cent for comparable hybrid projects.
Additionally, the bidder committed to completing the project within 20 months, shorter than the standard 24-month timeline, which CESC claimed could result in potential savings of Rs 0.02 per kWh.
The Commission further pointed out that awarding the entire 300 MW capacity to a related party.
"Another interesting point to note is that in response to the RfS in Petition 365/AT/2024 as well as the present petition, the bidders participating in the bids are precisely the same, and the winning bidder, being a wholly owned subsidiary of the petitioner, is also the same. While this could be a coincidence, it raises a question mark on transparency," the order noted.
The Commission also rejected CESC's justification of the higher tariff on the grounds of higher capacity utilisation and project timelines, noting that the company's comparison of the discovered tariff with short-term prices in the Green Day-Ahead Market (G-DAM) was misplaced.
CERC clarified that such comparisons are not valid under the guidelines, which require benchmarking against tariffs discovered through long-term competitive bidding.
The July 9 order advised CESC to go for re-bidding strictly in accordance with the guidelines issued under Section 63 of the Electricity Act.