Power utilities have proposed to collect Fuel and Power Purchase Cost Adjustment (FPPCA) charges amounting to Rs 81 billion from power consumers, covering dues from the 2022-23 fiscal year. Discoms filed their request with the Andhra Pradesh Electricity Regulatory Commission (APERC) in November 2022. However, APERC delayed the decision due to elections, scheduling a public hearing for October 8, 2024. If approved, consumers may face an additional charge of Rs 1.27 per unit.
The discoms attributed the need for these charges to the high costs of short-term power purchases, which were required due to a delay in commissioning new generation capacities. A senior official explained that the State’s energy demand outpaced supply, forcing reliance on higher-cost short-term markets.
The discoms also faced financial strain from renegotiations of power purchase agreements (PPAs) with wind and solar developers. In March 2022, the High Court directed discoms to honour the original tariffs under the PPAs, which led to working capital loans of Rs 90 billion to clear dues. The government’s amendments to solar, wind, and hybrid policies in 2019, which removed incentives like the waiver of transmission and distribution charges, further restricted capacity additions to the grid.
During 2022-23, discoms purchased approximately 8,394 million units of power at Rs 65.22 billion, contributing to the increased need for FPPCA charges.