The Government has issued directives under Section 11 of the Electricity Act, 2003, to all Gas-Based Generating Stations (GBSs) to maximize their electricity generation. These directives aim to ensure uninterrupted power supply during the anticipated peak demand period exacerbated by predicted above-normal temperatures. This order was issue on May 16, 2025.
The directive comes in response to a sustained increase in India’s electricity demand, fueled by economic growth and further heightened during periods of high temperatures and peak consumption. The Indian Meteorological Department (IMD) has forecast above-normal maximum temperatures across most parts of the country until June 2025.
Acknowledging that despite utilizing all available generation resources, occasional power shortages persist in certain regions during non-solar hours, the government is taking proactive steps to optimize the output from GBSs. This follows a similar directive issued to Imported Coal-Based Generating Stations (ICBs) in February 2023, which remains in effect until April 30th, 2025.
Under the new directions, GRID-INDIA will play a crucial role in demand assessment and communication. They will inform GBSs in advance about expected high demand and stress days, allowing the power generators to arrange for the necessary natural gas supply. Furthermore, GRID-INDIA will notify GBSs at least 14 days ahead of the expected number of days they are required to operate during a week. GBSs scheduled by GRID-INDIA on a D-1 basis will be guaranteed dispatch at a minimum of 50% capacity round-the-clock during these designated high-demand periods.
The directive outlines a priority for power allocation. GBSs are mandated to first offer their power to their Power Purchase Agreement (PPA) holders as per the agreed terms. If a GBS has multiple PPAs with different Distribution Licensees and one fails to schedule their allocated power, that unutilized power must first be offered to other PPA holders. Only if no PPA holder schedules the power can it then be offered to other Distribution Licensees or in the power market. Any remaining surplus capacity will be made available to GRID-INDIA for grid support, with dispatch based on real-time grid requirements.
Regarding tariff, GBSs with PPAs will offer their capacity at the Energy Charge Rate (ECR) determined by the relevant regulatory commission. For GBSs without PPAs, they must offer their capacity based on a benchmark ECR to be determined by a specially constituted committee chaired by the Chairperson of the Central Electricity Authority (CEA). This committee will ensure the benchmark rates cover all prudent costs incurred by GBSs, including natural gas price, transportation, and other associated charges, and will review these rates every 15 days based on changes in gas prices and transport costs. GBSs offering power in the power exchanges or for grid support will not be able to charge more than 120% of their ECR plus applicable intra-state transmission charges. For GBSs with PPAs, any revenue above the ECR will first be used to meet fixed costs, with the PPA holder(s) remaining liable for any unrecovered fixed costs as per their agreement. GBSs scheduled for grid support will be compensated at their offered price.
The order also addresses payment security, stating that the mechanism prescribed under the Late Payment Surcharge Rules, 2022, will apply, with weekly payments to be made by the procurers. Rebates will be admissible as per CERC norms or PPA stipulations, whichever is higher. Payments for power dispatched by GRID-INDIA for grid support will be made from the statutory pool as per CERC regulations. Importantly, GBSs are directed to operate as per these instructions regardless of any prior outstanding dues, which will be dealt with separately.
These directions override any conflicting provisions in existing PPAs or other agreements and will remain valid for power generation and supply from May 26, 2025, to June 30, 2025. Generators are required to submit weekly reports to GRID-INDIA on their power generation and sales. GRID-INDIA will issue detailed procedures for implementing these directions within seven days of the order’s issuance.
