Uttar Pradesh Electricity Regulatory Commission (UPERC) has approved Uttar Pradesh Power Corporation Limited’s proposed long-term procurement of 511 MW hydro power, with an additional 10% overload, from the Khorlochhu Hydro Power Station in Bhutan through Tata Power Trading Company Limited, along with the draft Power Sale Agreement proposed to be executed between them. Page 18 The supply is scheduled to commence from 1 May 2030, continue for a period of 30 years from the commercial operation date, and remain available during the summer months from May to October each financial year at a tariff of Rs. 6.75 per unit at the Indo-Bhutan periphery.
In exercise of its jurisdiction under Section 86(1)(b) of the Electricity Act, 2003, the Commission held that it may approve procurement of cross-border electricity by a distribution licensee where the proposed procurement is justified on demand and regulatory grounds, the price and procurement structure are placed before it for scrutiny, and the arrangement is consistent with the governing statutory and regulatory framework. At the same time, such approval remains subject to compliance with the applicable cross-border electricity regime, including the Ministry of Power Guidelines and the CERC Cross Border Trade of Electricity Regulations, 2019, particularly the requirement of approval from the designated authority.
The Commission also recognises that a fixed all-inclusive tariff for long-term cross-border hydro procurement may be approved where the record shows that the tariff has been derived in accordance with the applicable CERC tariff framework, the supply profile aligns with the procurer’s peak demand requirement, and the procurement promotes reliability of supply while ensuring long-term price certainty in consumer interest.
The Quorum of Arvind Kumar (Chairman) and Sanjay Kumar Singh (Member) noted that the petition concerned procurement by a distribution licensee and therefore fell within the field of Section 86(1)(b) of the Electricity Act, 2003, which empowers the State Commission to regulate electricity purchase and the procurement process, including the price at which electricity is procured from generating companies, licensees, or other sources for distribution within the State.
The Commission observed that under the Ministry of Power’s 2018 Guidelines, any entity proposing to import or export electricity may do so only after taking approval of the designated authority, unless the import/export takes place under an inter-governmental agreement for specific projects. It further observed that, under the CERC Cross Border Trade of Electricity Regulations, 2019, a participating entity must be approved by the designated authority for the purpose of cross-border trade. In the present case, TPTCL admitted that such approval from the designated authority, namely the CEA, would be obtained only after the PSA was approved by the Commission and executed.
On merits, the Commission recorded that the proposed supply was for 511 MW with an additional 10% overload for the summer months of May to October, with 4 hours of storage capacity to meet peak hour requirements, and annual contracted energy of 1748 MUs. It also recorded that the tariff of Rs. 6.75 per kWh at the Indo-Bhutan periphery had been levelised over 30 years in accordance with the CERC Tariff Regulations, 2024, that the tariff would remain fixed without annual escalation, that all charges up to the Indo-Bhutan periphery would be borne by TPTCL, and that the trading margin of 5 paise per unit and SNA charges were already factored into the tariff.
The Commission further observed that the project’s peak supply period was suitably aligned with UPPCL’s peak summer demand and that the fixed tariff structure, inclusive of trading margin and SNA charges and without annual escalation, would provide long-term price certainty and protect consumers against future price volatility during peak months.
Briefly, the petition was filed by Uttar Pradesh Power Corporation Limited under Section 86(1)(b) of the Electricity Act, 2003 seeking approval for procurement of 511 MW hydro power, with an additional 10% overload, on a long-term basis from Khorlochhu Hydro Power Station in Bhutan through Tata Power Trading Company Limited, and for approval of the draft Power Sale Agreement. The proposed supply was to commence from May 01, 2030, continue for 30 years from COD, be available during May to October each year, and be supplied at a tariff of Rs. 6.75 per unit at the Indo-Bhutan periphery.
UPPCL justified the procurement on the basis of its hydro purchase obligation, renewable purchase obligation backlog, projected demand deficit, and the need for summer peak power. UPPCL stated that TPTCL had offered supply from the 600 MW Khorlochhu Hydro Power Limited project in Bhutan, being developed by Tata Power Company Limited in collaboration with Druk Green Power Corporation, Bhutan. The proposal envisaged annual contracted energy of 1748 MUs during the summer months, with hydro renewable energy benefits to be passed on where eligible.
During the proceedings, the Commission raised questions regarding the continuing validity of the inter-governmental framework after SJVN’s exit from the project, the basis of tariff determination, the absence of State Government approval, the need for import from outside India through negotiated procurement, the landed cost of power, the trading margin, and whether approval of the designated authority under the cross-border guidelines had been obtained. UPPCL and TPTCL responded that the inter-governmental framework continued, that the tariff was determined in accordance with the CERC Tariff Regulations, 2024, that the tariff of Rs. 6.75 per unit was fixed and inclusive in character, and that approval from the designated authority would be obtained after approval of the PSA and its execution.
Appearances:
Shri Venkatesh (Founding Partner), assisted by Ashutosh K. Srivastava (Partner), Ashwin Singh (Senior Associate) and Aniket K. (Associate) from SKV Law Offices, for TPTCL
Satya Jha, Adv., Abhishek Kumar, Adv., Nived Veerapaneni, Adv., for TPTCL
Order Copy- Uttar Pradesh Power Corporation Limited vs Tata Power Trading Company Limited