Power companies explore legal options in payment clause

NEW DELHI: Power producers are exploring legal options after the Central power regulator referred to ‘force majeure’ clause in an order reducing surcharge on delayed payments by discoms to generation plants till June. They are worried that state distribution companies will interpret the reference of the force majeure clause in the order issued on Friday by CERC to their advantage. The Delhi Electricity Regulatory Commission has also backed BSES Delhi discoms invoking force majeure clause.

ET on Thursday reported that the power companies have said that nationwide lockdown to prevent coronavirus spread is no premise for state electricity distribution utilities to invoke force majeure clause and renege from contractual obligations under power purchase agreements (PPAs). Discoms of states like Delhi, Madhya Pradesh, Telengana, Punjab, Haryana and Uttar Pradesh have also invoked force majeure event as per PPAs with many plants citing reduction of electricity demand due to lockdown to prevent the spread of Covid-19.

A senior executive in a power firm said, “Power producers are exploring their options as the regulator order has created more ambiguity than clarity. The intent of power regulator is not evident from this order, as the PPAs do not provide for exemption or reduction in LPS.”

The Central Electricity Regulatory Commission (CERC) in the Friday order decreased late payment surcharge (LPS) payable by discoms to generation and transmission companies to 1% per month from the previous 1.5% per month from April 24 till June 30.

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