Gencos Restrict Power Supply To Discoms

The electricity production firms (gencos) have begun restricting power supply to distribution businesses (discoms) that have delayed paying their monthly dues, with supplies to those in Meghalaya and Sikkim being reduced by a quarter, claimed sources. The change comes after the June announcement of the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. 

"The developed LPS rules are an extremely robust method. Meghalaya and Sikkim's power supplies are already subject to regulation. They do, however, operate their own (power generation) facilities. One of the two persons cited above, who also requested anonymity, stated that more names of states "should come up in the next few days." 

According to the regulations, gencos have reduced power supply to discoms in the two states that have not paid their monthly dues by 25% of the contracted volume, the official cited above said, adding that the payment status of discoms is constantly being monitored. 

As per the new "late payment surcharge" (LPS) regulations, the genco will only provide 75% of the contracted electricity to the distribution licensee if a discom does not pay the outstanding dues two and a half months after the creation of the bill. The genco may sell the remaining 25% through power exchanges.

The genco can sell all of the power it purchased from the discom under the power purchase agreement through the exchanges if the payment default lasts another 30 days, in which case it will stop delivering power to the discom altogether. 

The government has stepped up its campaign to get state discoms to pay the roughly $1.5 trillion in genco dues. On July 30, Prime Minister Narendra Modi asked states to pay their outstanding debts to power producing companies in order to safeguard the businesses' capacity to continue operating and, in turn, meet the nation's energy needs. 2.5 trillion in total debt is owed in the country's electricity sector, including to gencos and discoms.