BACKGROUND

The CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (“GNA Regulations”), notified on 07.06.2022 and amended on 01.04.2023, 19.06.2024 and 31.08.2025, require every Connectivity grantee to sequentially achieve three milestones:

1. submission of land documents for at least 50% of the land required for the granted capacity, within 18 months of an in-principle grant or 12 months of a final grant, whichever is earlier [Regulation 11A(1)];
2. achievement of Financial Closure (“FC”), at least 6 months prior to the Scheduled Commercial Operation Date (“SCOD”) or the firm start date of Connectivity, whichever is later [Regulation 11A(2)]; and
3. achievement of Commercial Operation Date (“COD”), generally by the SCOD (or, for LoA/PPA-route cases, within 6 months of SCOD/firm start date), subject to further relaxation where ISTS substation coordinates are delayed [Regulation 24.6].

Failure to meet any milestone in time triggers revocation of Connectivity and encashment of the relevant Bank Guarantee(s), the Land BG (land non-compliance) or Conn-BG1/BG2/BG3 (FC/COD non-compliance), under Regulations 11B and 24.6.

Numerous entities, at varying stages of implementation, including advanced-stage projects, approached CERC (upon receiving, or in anticipation of, revocation notices) seeking additional time. Rather than adjudicate each case individually, CERC resolved to notify a uniform, generally applicable Compensation Procedure permitting additional time on payment of Milestone Extension Charges (“MEC”), irrespective of the reason for delay, given that Connectivity is a scarce transmission resource.

THE FINAL ORDER DATED 14.08.2026 – THE FINALISED PROCEDURE (ANNEXURE-I)

Change in legal basis: The final Order is issued under Regulation 41 (Power to Relax) read with Regulation 44 (Suo Motu Orders and Practice Directions), Regulation 42, invoked in the Draft, has been dropped. Regulations 11A, 11B, 24.6 “and other associated Regulations” are expressly relaxed. The Procedure is thus now framed as a general suo motu practice direction rather than case-specific hardship relief.  [Paras 8-9 @Pg. 5]

Eligibility criteria (Clause A), summarised below, with the change from the Draft Proposal:

CTUIL scrutiny mechanism [new – Clause A(1)(iv)–(v)]: CTUIL must flag any deficiency in the entity’s documents within 7 working days of receipt; the entity gets 7 working days to cure it, failing which it becomes ineligible for this Procedure. Once cured, CTUIL must confirm eligibility and the MEC payable within a further 7 working days; the entity must pay within 3 working days, failing which the extension application is closed and the Connectivity is dealt with strictly under the GNA Regulations.  [Page 7 of the Order; rationale – para 2.8.6 @Pg. 17]

MILESTONE EXTENSION CHARGES (“MEC”) – RATE STRUCTURE (CLAUSE B)

MEC is payable 15 days in advance (an entity may pay for a longer estimated period at its option); any unutilised excess is now refundable without interest within a specified 15 days of compliance, this timeline was left open-ended in the Draft.  [Page 8-9; refund timeline at page 21, para 3.15.10]

Partial refund on timely COD [Clause B(3)]: If COD is achieved by the Regulation 24.6 due date plus the 2-month grace period, 50% of the MEC paid for land/FC extensions (for the capacity that achieved COD on time) is refunded without interest within 1 month of COD declaration.  [Page 10; rationale at page 28, para 5.12.4]

Adjustment facility [Clause B(4)]: An entity may, by written request, elect to keep unutilised advance MEC with CTUIL for adjustment against MEC payable for a different milestone, instead of taking a refund.  [Page 10; rationale at p.28, para 5.12.5]

Multiple milestones: MEC remains payable separately for each milestone for which extension is sought, the stakeholder request to club or net off MEC across milestones (or against the eventual COD delay) was rejected, save for the 50% refund mechanism at (2) above. [Page 10; rejection at page 29, para 6.3.1]

COD grace period [Clause B(5)]: Where the Regulation 24.6 revocation trigger falls within 2 months of the GNA-effectiveness date, the entity is given at least 2 MEC-free months from GNA effectiveness to achieve COD; the final Order clarifies that this period falls within, not in addition to, the overall 12-month COD extension cap.  [Page 10; rationale at pages 29-30, paras 7.7.1-7.7.3]

No change to firm start date [Clause B(9)]: Extension of milestones does not alter the firm start date of Connectivity; the entity remains liable for mismatch charges under the Sharing Regulations, 2020, for the extension period.  [Page 11]

CERC’S KEY CLARIFICATIONS ON STAKEHOLDER OBJECTIONS (ANNEXURE-II)

Optional, not mandatory: Availing the Procedure is the entity’s choice; an entity that does not opt in continues to be governed strictly by the GNA Regulations, i.e., ordinary revocation on non-compliance. [Page 13, para 1.7]

No Force Majeure carve-out: MEC is payable irrespective of the reason for delay; all stakeholder requests for FM/no-fault exemptions or nominal charges were rejected, Connectivity being a scarce resource, meeting the eligibility criteria is treated as demonstrating project seriousness, not fault. [Page 14, para 1.10]

PPA/LD untouched: The Procedure does not override, dilute or modify PPA/PSA terms (including Liquidated Damages), and does not affect State Commission jurisdiction over PPA enforcement. [Page 13, para 1.8]

Not a “Change in Law”: Payment of MEC is expressly held not to constitute a Change in Law event and is not eligible for tariff pass-through. [Page 14, para 1.11]

Universal, immediate application: The Procedure applies from 14.08.2026 to all eligible entities, including existing grantees, the request to apply it prospectively to new applications only was rejected. [Page 13, para 1.9]

No DISCOM consent required before an entity approaches CTUIL for extension, even where ISTS transmission-charge waivers may be affected.  [Page 14, para 1.11]

Land documents are confined to instruments recognised under the GNA Regulations read with CTUIL’s Detailed Procedure, Agreement to Lease/Sell is not independently recognised merely because stakeholders proposed it.  [Page 17, para 2.8.4]

No shield against PPA/LD exposure: Because the Procedure is expressly without prejudice to PPA terms, availing a CERC extension does not, by itself, protect against Liquidated Damages or termination risk under the underlying PPA/PSA, that exposure must be separately managed/negotiated with the procurer.