Punjab State Power Corporation Ltd. (PSPCL) is in hot soup over fixed charges payable to power generators and fixed charges receivable from industrial consumers.

Punjab State Power Corporation Ltd. (PSPCL) on April 2 invoked Force Majeure conditions curtailing of power from the  1980 MW Talwandi Sabo, 1400 MW Rajpura and 540 MW Goindwal thermal stations and other generation plants following load crash in the state after the declaration of locked down in the country to save paying fixed charges. PSPCL hopes to save  Rs.600 crore of fixed charges in the month of April as daily saving is around Rs.20 crore.

V K Gupta a spokesperson of All India Power Engineers Federation (AIPEF) said that now the Ministry of Power has added another dimension to this as it has written a letter on March 6  to all state governments and other stakeholders that power utilities are under obligation to pay capacity charges as per power purchase agreements(PPA) . The obligation to pay for power within 45 days of presentation the bill remains unchanged.

This has put a question mark on the ability of PSPCL to not to pay fixed charges under force majeure conditions.

Punjab Government  issued an order on March 7 exempting  fixed charges for medium supply and large supply  industrial consumers  for the next 2 months from  March 23 and energy charges may be fixed to commensurate with the reduction in fixed charges. The government gave directions to Punjab State Electricity Regulatory Commission (PSERC) under section 108 of the Electricity act 2003.

V K Gupta said that medium and large supply industry will be saving at least Rs. 180 crore during two months period on account of non-payment of fixed charges. Under lockdown conditions as the industry will  remain under shut down so there will be no energy charges and PSPCL is all set to lose  more than 700 crore for the month of April. Small scale industry and commercial establishments are not covered under this order.

It is well-established case law that government directions to the commissions are to be implemented as long as they are not in conflict with substantive provisions of the Act. Moreover, it violates the spirit behind fixed charges. How will PSPCL  meet its fixed charges like salaries, interest payments, etc?  Further, this will alter the ARR of the PSPCL unless the government gives subsidy for the exempted fixed charges otherwise the fixed charges of the industry shall shift over to other consumers which will be against the provisions of the Act.
Under Section 65 of the Electricity  Act 2003, if the state government wants to subsidize any category of consumers, it has to pay subsidy in advance to Discom. The present instructions of Punjab govt giving huge subsidy to industrial categories clearly conflict with Sec 65 and may not be legally valid. The default in subsidy payment by Punjab govt to PSPCL as of 31 March 2020 is Rs 5577.98 crore.
PSERC has already extended the last year's tariff order for the current financial year