In pursuance of Clause 5 6 vi of the Ministry of Power MOP Notification on Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees

## Report on Amendment to Guidelines for Long Term Procurement of Electricity **1. Executive Summary:** This report analyzes a notification from the Central Electricity Regulatory Commission (CERC) regarding an amendment to guidelines for the long-term procurement of electricity from thermal power stations. The core purpose of this amendment, as inferred from the text, is to update escalation rates for imported coal and its associated transportation and handling costs used in power purchase agreements. Key findings indicate revised monthly escalation rates for imported coal, transportation, and inland handling, impacting distribution licensees and thermal power stations. **2. Introduction:** This report aims to provide a comprehensive overview of the CERC notification dated March 24, 2025, which constitutes an amendment to existing guidelines concerning long-term electricity procurement. The analysis is based solely on the information provided within the notification text. **3. Policy Overview:** * **Amendment to:** This notification amends the Ministry of Power (MOP) Notification on Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees dated 19.01.2005 as amended from time to time, and MOP Resolution dated 11.07.2022 on an amendment to the Guidelines for long term Procurement of Electricity from Thermal Power Stations. * **Core Objective(s):** The core objective, as stated in the text, is to notify the updated monthly escalation rates for imported coal and its associated logistics costs for the purpose of payment in power purchase agreements. **4. Background and Rationale:** This amendment likely arises from fluctuations in the global coal market and associated transportation costs. The existing guidelines for long-term power procurement require periodic adjustments to reflect these changing market conditions and ensure fair pricing. The amendment ensures that power purchase agreements (PPAs) reflect current market realities, particularly related to imported coal. **5. Key Provisions / Changes:** This notification focuses specifically on updating the monthly escalation rates for imported coal-related costs. * **Specific Part of Original Policy Changed:** The amendment specifically addresses the calculation of tariff based on imported coal costs within the framework of existing power purchase agreements derived from the aforementioned guidelines. * **New Rule/Provision:** The notification introduces the following specific monthly escalation rates applicable for March 2025: * Escalation rate for imported coal: 3.24 * Escalation rate for transportation of imported coal: 4.20 * Escalation rate for inland handling of imported coal: 0.49 * **Difference/Effect of Change:** This amendment replaces the previous escalation rates for these categories with the new rates listed above. The effect of this change will be an adjustment in the payments made to thermal power stations based on the revised escalation rates for March 2025. **6. Target Audience and Stakeholders:** The primary stakeholders affected by this amendment are: * Distribution Licensees: These entities are responsible for procuring power under the specified guidelines. * Thermal Power Stations: Specifically, those that source fuel based on Design, Build, Finance, Own and Operate (DBFOO) basis including allocation of coal under B I, BIII and BIV of SHAKTI Scheme for Harnessing and Allocating Koyala Coal Transparently in India Policy dated 6.03.2019, the CERC notifies the following escalation rates for the purpose of payment. * Central Electricity Regulatory Commission (CERC): Regulatory body overseeing and implementing these guidelines. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The CERC is responsible for notifying and implementing these changes. Distribution licensees will be responsible for incorporating these rates into their payment calculations as per the Power Purchase Agreements (PPAs). * **Timelines/Procedures:** The amendment specifies that the rates are applicable for March 2025. Distribution licensees will need to update their payment calculations accordingly for the mentioned month. The communication from MOP to CERC dated 13.04.2022 and MOP Resolution dated 11.07.2022 also guide the implementation of these rates. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of these changes is to ensure accurate and updated payments to thermal power stations, reflecting the current costs associated with imported coal and its transportation. This will likely impact electricity procurement costs for distribution licensees, potentially influencing consumer tariffs. The adjustment aims to maintain financial viability for power generators and ensure a stable supply of electricity. **9. Conclusion:** The CERC notification represents an important update to the guidelines for long-term power procurement, specifically addressing the escalation rates for imported coal and related costs. The revised rates will directly impact distribution licensees and thermal power stations involved in long-term power purchase agreements. These changes are significant for ensuring accurate tariff determination and reflecting current market realities in the power sector.

Key Entities Referenced