Acts Online
GT Shield

Electricity Regulation Act, 2006 (Act No. 4 of 2006)


Regulatory Rules for Power Purchase Cost Recovery

Annexure 2 : Explanatory Memorandum


The provisions of regulation 10 of GN R.721 GG No. 32378 of 5 August 2009 (Electricity Regulation Act No. 4 of 2006: Electricity Regulations on New Generation Capacity) authorise the Energy Regulator to prepare and pass rules not inconsistent with these regulations for purposes of cost recovery by the system operator and the buyer which shall clearly and transparently set forth:


1. The factors that should be considered in assessing—
(a) The affordability of the proposed IPP;
(b) The allocation of financial, technical and operational risk between the buyer and the IPP; and
(c) The anticipated value for money to be achieved by the IPP


2. The process to be followed by the buyer in seeking the approval of costs incurred under the power purchase agreement;


3. The process to be followed in assessing the principle of efficient risk transfer in the power purchase agreement and the mitigation mechanism in relation to the off-taker; and


4. All such matters as are necessary to give effect to these regulations