States and UTs that will tax clean energy projects, obstruct the flow of power between states, and have not paid electricity tariff subsidy dues will not get electricity from the central pool. The Ministry of Electricity also said in an office order that states with regulatory assets would not get any power from the central pool. Regulatory assets come into existence when power regulators acknowledge that the tariffs imposed on electricity consumers do not adequately cover the power purchase costs of distribution
companies. Certain aspects will be examined whenever a request will be received from any state/union territory (UT) for allocation of power from the unallocated quota of Central Generating Stations, the order dated March 31, 2023, said.
The ministry will take into account the lack of regulatory assets and the prompt payment of any subsidies announced by the state government to distribution utilities in the consumer tariffs. Lastly, it was added that "allocation of power to a state/UT would be strongly disincentivised if it is found violative in any of the above criteria," specifically mentioning taxes or fees imposed by the state in question on hydropower or renewable energy projects that could impede the interstate flow of electricity.
The Ministry of Electricity periodically distributes Central Generating Station capacity to states from its pool of unallocated quota (CGS). According to the decree, states that practise fiscal responsibility and refrain from imposing taxes or fees on the flow of power to other states would be given preference when it comes to receiving this power from the unallocated quota.
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