The government has amended the guidelines for short-term procurement of power by discoms, making it mandatory for such transactions to be processed online under the reverse auction route to bring more transparency into the system. A power procurement period ranging from a day to a year is considered as short-term.
Short-term power procurement forms a major chunk of power purchase agreements (PPAs) entered into by distribution companies every year. In the first three month of this year, at least five states — UP, Kerala, Punjab, Uttarakhand and Assam — have floated tenders and received bids for short-term power supply of nearly 2,000 megawatts (MW) of combined capacity.
The quantum and tariff for requisition of short-term power under this system will have to be approved by the appropriate commission. In such cases, the distribution licencees will intimate about the initiation of the procurement process to the said commission, the guidelines released by the power ministry said.
The transaction for short-term energy requisition from power exchanges has been exempted from these guidelines. Additionally, the guidelines mandate that the tariff discovered at the end of the reverse auction should be constant, without provision for any escalation during the contractual period. If bids are invited for different time slots, tariffs may be different for each time slot, the ministry said.
Power developers participating in the e-reverse auction will have to specify the source of power for any particular bid. Each bid will have only one price per requisition, accompanied by the total quantum of power the bidder intends to supply and minimum threshold quantum acceptable to the bidder.
Under the guidelines, the bidders, during the auction, will have the option of reducing the tariff quoted by them in decrements of one paise or multiples thereof, and to increase the quantum quoted by them by 1 MW or its multiple. During the reverse auction, the prevailing lowest tariff would be visible to all the bidders.