Punjab Government has issued today a white paper on the power purchase agreements (PPAs) in the assembly and all the quoted tariffs of the agreements shall stand terminated.

Punjab State Electricity Regulatory Commission(PSERC) has been requested for re-determination of tariff including both Capacity and Energy Charges and all matters that impact tariff directly or indirectly.

In order to ensure continuity in the electricity supply and energy security of the State, PSERC shall also determine a temporary tariff rate to be made applicable in the Interregnum period till the tariff is finally re-determined by the commission.

The white paper has highlighted that the peak power demand for the year 2011-12 was calculated as per the 17th EPS survey report made an assumption of demand growth at the rate of 8.75%.

This was worked out for the year 2011-12 was to be 11000 MW which was further extrapolated to 15385 MW for the year 2015-16. The actual peak demand in 2015-16 was just 11917 MW. As such there was a huge difference of 3468 MW between the projected demand and the actual demand Apart from these 3 private sector thermal plants set up at Rajpura, Talwandi Sabo. and Goindwal Sahib with a total installed capacity of 3920 MW based on the projected demand was set up.

Further additional generation capacity was added in various sectors resulting in a net surrender of power from private generators entailing a very high per-unit cost of electricity to the consumers of the State.

PSPCL contracted 100% capacity throughout the year although peak requirement was seasonal The white paper states that the PPAs have a format that does not have the provision for termination by the PSPCL even in case of default by the IPPs, whereas the converse entails such rights available with the IPPs.

Such provisions make these Agreements lopsided.