Parvesh Kumar
Sharma
Parvesh Kumar Sharma is
an Advocate and legal and regulatory expert with more than 15 years of
experience in the Indian power sector. He has worked extensively on electricity
regulations, power markets, renewable energy, corporate transactions and
strategic advisory and has appeared before various judicial and quasi-judicial
forums. Formerly Head of Legal & Regulatory division at Hindustan Power
Exchange Ltd., he is presently in independent practice and regularly writes on
emerging legal and regulatory issues in the energy sector. His work strives to
devise innovative and practical approaches to electricity law and market
regulation.
Uttar Pradesh
Power Corporation Ltd. (UPPCL) has directed distribution companies (discoms) in
the UP to levy a Fuel and Power Purchase Adjustment Surcharge (FPPAS) on the
consumers for June which is likely to rise the power bills by 10%. The
surcharge is imposed under amended UPERC (MYT for Distribution and Transmission
Tariff) Regulations, which allows discoms to levy FPPAS automatically on
monthly basis without any regulatory approval as per the formula specified in
the Regulations.
While increase in fuel
and procurement costs for genuine and unavoidable reasons may justify surcharge
in some cases, but automatic recovery of all cost escalations without any
scrutiny will not provide any incentive for the discoms to improve their
efficiency. Present power market offers multiple avenues to manage procurement
risks – Day Ahead, Term Ahead, Contingency, Ancillary markets etc. on power
exchanges, power banking arrangements between discoms without financial
consideration and electricity derivatives to hedge their risks and price
volatility.
Consumers do not have
control over most of the factors contributing increase in purchase cost like
procurement errors, high AT&C losses, mismanagement etc. Thus, regulatory
scrutiny should ensure that only prudently incurred and unavoidable costs are
passed through. The focus of regulations must be to encourage efficiency
improvements in discoms.
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Related link - https://economictimes.indiatimes.com/industry/energy/power/up-consumers-to-pay-10-fuel-surcharge-on-june-power-bills/articleshow/131405735.cms
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