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Power purchase agreements in Indian power sector: a case study of Andhra Pradesh

Student name: Mr E. Abhay Krishna
Guide: Dr Jaya Vasudevan
Year of completion: 2020

Abstract:

Power Purchase Agreements (PPAs), are those agreements that deal with the generation and purchase of the power or the electricity. This is a centralized document that regulates for the implementation of the projects in relationship to the power sector in India. The Central Electricity Regulatory Commission (CERC) is the regulatory authority that deals with the regulation of PPAs. A Power Purchase Agreement deal with two major objectives, firstly, it deals with the construction, operation and maintenance of power station and secondly the purchase and sale of electricity to govern these agreements, The Electricity Act, 2003 states that these power purchase agreements for buying and selling can be made for a period varying from 1 month to 40 years. The trends in Indian power sector prefers to have a long term power purchase agreement with regard to either generating or distributing of power so that there will not be any renegotiating after the companies have invested much on the infrastructure. On a positive note, the reason for providing a long term contract between the parties maintain the legal sanctity in the contract, but on the other hand it opens a chance for the parties to have control over the market by forcing the majeure clause contained in the contract. The issue revolving around the power sector is, whether State Electricity Commission under the Act can reopen the PPAs as well as re-determine the price in already concluded agreements? The objective behind this is to protect the interest of the consumers. This questions the sanctity of the existing contracts. The lack of a clear long-term procurement contract raises the risks associated with the project. The present dissertation will provide an analysis of the regulatory power of the State Electricity Regulatory Commission with respect to the renegotiation of the already concluded contracts with the help of case study of Andhra Pradesh.