KSERC allows retention of the ceiling tariff of ₹3/kWh by KSEB
The Kerala State Electricity Board Limited’s (KSEB) request for inviting bids for procuring 200 MW solar power had been approved by The Kerala State Electricity Regulatory Commission (KSERC). The Commission also gave its approval to the modified bidding documents and draft PPA submitted by KSEB on July 30, 2020, and directed KSEB to submit a copy of the tender documents, including the request for selection (RfS), and the PPA within 30 days of publishing of the tender, asking KSEB to submit a petition for the adoption of tariff after the completion of the bidding process. The Commission also allowed KSEB to retain the ceiling tariff of ₹3 (~$0.04)/kWh.
Earlier, KSEB Limited had filed a petition on October 14, 2019, seeking approval for modifications in the standard bidding documents for the procurement of 200 MW of solar power from anywhere in the country. KSEB floated the tender on March 02, 2019, and CIAL infrastructures emerged as the lone bidder with a bid of 10 MW. KSEB cancelled the tender due to the inadequate response from the generators. To achieve the solar renewable purchase obligation (RPO) target later on, and to ensure better participation, KSEB decided to float a revised tender for the project. The preference was to be given to projects to be set up within the state of Kerala. Later, KSEB decided to modify the bidding documents, RfS, and the draft PPA, earlier approved by the KSERC so that that power could be procured from ground-mounted solar projects situated anywhere in India with a preference to Kerala bidders, and submitted the revised bidding documents and the draft PPA for the procurement of 200 MW power from solar projects on March 06, 2020.
The Commission communicated its preliminary observations and comments on the bidding documents submitted by KSEB and directed it to resubmit the bidding documents after incorporating them. Hearing of the petition was conducted on June 09, 2020. KSEB submitted during the hearing that it was in the process of incorporating the observation and comments of the Commission in the bidding documents, and the revised bid documents would be submitted within two weeks.
The Clause 5.2.1(a) of the bidding guidelines provides, the Commission noted, that the procurer is allowed to specify the terms for assessing the potential costs associated with the shortfall in the generation below the contracted level. The Commission suggested that KSEB should modify the draft PPA and also incorporate necessary provisions in the PPA to assess the penalty to be imposed on the generator due to the low generation below the contracted capacity utilization factor (CUF), while also added that the bidding guidelines notified by the central government provide that the procurer should include the evaluation criteria and procedure for the selection of bidders. So, it directed KSEB to also incorporate it in the RfS. In compliance with the directions of the Commission, KSEB submitted the modified bid documents, draft RfS, and PPA.
Examining the modified bid documents submitted by KSEB, the Commission noted that although most of the observations and suggestions had been incorporated in the bidding documents, however, a few recommendations were not included. The Commission directed KSEB to incorporate those suggestions in the bid documents, RfS, and draft PPA.
KSERC further noted that in the present petition for approval of bidding documents, KSEB had proposed a ceiling tariff of ₹3 (~$0.04)/kWh. However, in March this year, MNRE issued a notification stating that the upper ceiling tariff would not be prescribed in future bids. The Commission said that the present petition for approval for bidding documents was initially submitted before the Commission on October 14, 2019. As the date of submission was before the notification issued by the MNRE, the Commission allowed KSEB to retain the ceiling tariff of ₹3 (~$0.04)/kWh.
The Kerala Government had previously launched a program called ‘Soura’ to add 1,000 MW of solar projects to the existing capacity of KSEB by 2022, which would be implemented under the Urja State Kerala Mission and will be executed to fulfill the state’s RPO.
