Karnataka Electricity Regulatory Commission (KERC) Chairman K P Pandey may reprimand the State government’s Energy Department day after day for issuing various “illegal orders,” but the Energy Department seems to be unperturbed about the KERC chief’s orders.

Otherwise how can the Energy Department recently issue an order, which proposes to vest the Special Purpose Vehicle (SPV) with the authority to enter into Power Purchase Agreements (PPA) with independent power producers on behalf of five Electricity Distribution Companies (Escoms) in the state when the KERC had termed such action by State Power Procurement Co-ordination Centre (SPCC) as illegal in 2005?

The state government recently formed SPV, a company with the avowed objective of enabling early setting up of power projects in the state by carrying out the spade works on behalf of private companies which come forward to set up the projects and then hand over land etc to them.

But now the state government proposes to entrust the responsibility of signing the PPA on behalf of Escoms with the SPV which the KERC feels is “illegal”.

Because the KERC feels that as Escoms are independent companies, according to the provisions of Electricity Act the authority to sign PPAs rests with Escoms and not with some “illegal child” of the government.“

Power purchase
The power purchase cost accounts for nearly 80 per cent of expenditure incurred by the power utilities. If these bodies have no authority whatsoever on the dealings, how one can say that these companies are functioning independently,” asked sources in KERC.

In 2005, the KERC had termed as illegal the signing of PPAs by SPCC.

Since its formation the SPCC is headed by Principal Secretary and Additional Chief Secretary Dilip Rau.
Subsequently to save its face the government ‘forced’ the Escoms to pass a resolution stating that since they had ‘no competence to sign PPAs,’ they were entrusting the responsibility to the SPCC.

Referring to the latest order, the KERC member commented that if they again ask the government to withdraw the order, the chances are that the government may again force the Escoms to pass a resolution similar to the one it made them to pass in 2005. “We’ll be left with no option but to remain as mute spectators,” he observed.
Asked why the government is issuing such ‘illegal orders,’ the member said, “The answer is simple because a lot of money is involved in signing the PPAs. By signing PPAs, those at the helm of affairs get benefitted.”