By Mark Ford

Several of India's state power utilities have been penalised for not putting up the letters of credit (L/Cs) they are legally required to provide.

The penalties follow power shortages caused by the utilities drawing more power from the grid than they had agreed to take.

Deviation

India has only now chosen to punish power utilities, even though legislation demanding L/Cs from electricity distribution companies was introduced in 2003.

Under that legislation, the companies are supposed to put up standby L/Cs as guarantees that they will not deviate from the amount of power they are contracted to draw from the electricity grid.

The punishments come in the wake of a collapse in the power system in late July when several power companies deviated from the amount of power they had agreed to take from the grid.

Fines

The Central Electricity Regulatory Authority (CERC) has imposed a penalty of 100,000 Indian rupees (Rs100,000) each on utilities in Uttar Pradesh, Jammu and Kashmir, Arunachal Pradesh, Nagaland, Bihar, Jharkhand, Manipur, Meghalaya, Mizoram and Madhya Pradesh.

The CERC has imposed a penalty of Rs90,000 each on utilities in Punjab and Tamil Nadu.

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