GERC Rejects Industry's Demand for 8% In-Kind Banking Charges
The Gujarat Electricity Regulatory Commission (GERC) has rejected the renewable energy industry's demand to replace the existing banking charge of Rs 1. 50 per unit with an 8% in-kind adjustment for Green. . .
The Gujarat Electricity Regulatory Commission (GERC) has rejected the renewable energy industry's demand to replace the existing banking charge of Rs 1. 50 per unit with an 8% in-kind adjustment for Green Energy Open Access (GEOA) consumers, opting instead to retain the current mechanism until August 31, 2026, while it finalises a comprehensive banking charge framework. The decision comes after multiple industry stakeholders, including Indus Towers, the Distributed Solar Power Association (DiSPA) and the Federation of Renewable & Consumers of Energy, argued during the public consultation that the existing monetary banking charge does not reflect the actual system cost incurred by distribution licensees and adversely impacts the financial viability of renewable energy projects. They urged the Commission to adopt the Forum of Regulators' (FoR) recommendation of levying banking charges through an adjustment in kind equivalent to 8% of the energy banked. Validity Of Banking ChargesRejecting the proposal, GERC said the current proceedings were limited to extending the validity of the existing banking charge and not for determining a new banking charge framework. It noted that similar submissions had been made during previous amendment exercises and reiterated that the methodology for banking charges is already under examination through a separate regulatory process. "The Commission has now published draft Sixth Amendment to the GEOA Regulations, 2024, to put in place methodology for determination of banking charges under the Regulations and invited comments/suggestions from the stakeholders," the regulator said, adding that the final methodology and quantum of banking charges would be decided after completion of the public consultation process. The Commission also dismissed arguments that Gujarat should immediately align its framework with the FoR's Model Regulations. It observed that the FoR's recommendations are "recommendatory in nature" and that State Electricity Regulatory Commissions retain the statutory discretion to determine banking charges based on state-specific network conditions, power procurement structure and policy considerations. It further held that there was no regulatory vacuum warranting adoption of the central model, as Gujarat already has a valid banking charge prescribed under its existing regulations. Interim ArrangementAnother key issue raised during the consultation was the repeated extension of what stakeholders described as an interim arrangement. Industry participants argued that the Rs 1. 50 per unit banking charge, introduced as a temporary measure, has been extended multiple times and has effectively continued for nearly three years, creating uncertainty for renewable energy developers and Green Open Access consumers making long-term investment decisions. GERC, however, maintained that continuation of the existing charge is only a transitional measure pending completion of the ongoing study. It said the Fifth Amendment neither introduces a new banking charge nor alters the existing rate or methodology, but merely extends the current levy until August 31, 2026, or until a new framework is notified earlier, to avoid a regulatory vacuum. The Commission also responded to concerns that the existing banking charge was not based on a transparent cost study. It acknowledged that banking charges must ultimately be "cost-reflective, reasonable and supported by evidence" and said this is precisely why it has initiated a dedicated study and public consultation before arriving at the final methodology. Green Energy Open AccessApart from banking charges, stakeholders sought changes to several provisions governing Green Energy Open Access, including simplified applications for aggregated low-tension consumers, exemption from transaction and meter reading charges, waiver of standby charges, flexibility in capacity transfers, stability of open access charges for five years and clarification on permissible banked energy. GERC declined to consider these requests, stating that they were outside the scope of the present amendment proceedings. With the Fifth Amendment now notified, the existing banking charge of Rs 1. 50 per unit will remain in force until August 31, 2026, while the industry awaits GERC's final decision on a cost-based banking charge methodology under the proposed Sixth Amendment Regulations.