CERC Introduces Milestone Extension Charges for Delayed Connectivity Compliance

The Central Electricity Regulatory Commission (CERC), vide Order dated August 14, 2026, in Petition No. 5/SM/2026 (the “Order”), has approved a procedure for levying Milestone Extension Charges (MEC) to permit eligible Connectivity Grantees additional time to achieve prescribed milestones under the CERC (Connectivity and General Network Access to the Inter-State Transmission System) Regulations, 2022 (GNA Regulations). The mechanism provides a structured alternative to immediate revocation of connectivity for entities that demonstrate sufficient project progress but require limited additional time to meet the applicable milestones.

The MEC mechanism, set out in Annexure-I to the Order, applies to the milestones relating to submission of land documents, Financial Closure (FC) and Commercial Operation Date (COD). The additional time is subject to prescribed eligibility conditions, and an entity may continue to be governed by the GNA Regulations without seeking an extension under the mechanism.

To avail the extension mechanism, the Connectivity Grantee must demonstrate specified project progress. In particular:

• at least 20% of the required land documents must be available for seeking additional time for land compliance and FC; and
• for seeking additional time for COD, the prescribed land-document threshold is 75% for the land/land-bank guarantee (BG) route and 50% for the Letter of Award (LOA)/Power Purchase Agreement (PPA) route.

The relevant documents must be submitted within the prescribed timelines and are subject to scrutiny by the Central Transmission Utility of India (CTUIL), with an opportunity to rectify deficiencies.

The Order introduces a graded MEC structure, with charges increasing with the duration of extension:

• For land compliance, MEC is Rs. 1,000/MW/day for the first month, increasing to Rs. 1,100 and Rs. 1,200 per MW/day in the second and third months, with a maximum extension of three months;
• For financial closure, MEC is Rs. 1,000/MW/day for the first three months, increasing to Rs. 1,100, Rs. 1,200 and Rs. 1,300 per MW/day in the fourth, fifth and sixth months, with a maximum extension of six months; and
• For COD, MEC is Rs. 3,000/MW/day for the first six months, increases by 10% per month to Rs. 3,300, Rs. 3,600 and Rs. 3,900 per MW/day in months seven to nine and rises to Rs. 6,000/MW/day for months ten to twelve, with a maximum extension of 12 months.

MEC is payable in advance on a per-day basis, generally 15 days in advance, with the option to pay for a longer estimated extension period. Failure to make the required payment may result in revocation of connectivity and corresponding treatment of the applicable bank guarantees. Where the relevant milestone is achieved before expiry of the period for which the MEC has been paid, the MEC attributable to the remaining period is refundable without interest within the prescribed timeline.

The Order also provides a limited financial adjustment where the project achieves COD without requiring MEC for COD extension. 50% of the MEC paid for additional time towards land and FC compliance shall be returned, including on a pro rata basis where only part of the project achieves COD. The remaining MEC proceeds, as well as 100% of MEC relating to COD, are to be utilised for reducing monthly transmission charges in accordance with the applicable Sharing Regulations.

Importantly, the MEC mechanism does not operate as a waiver of other contractual or regulatory consequences. The Order clarifies that the extension is entirely at the cost and risk of the Connectivity Grantee, does not modify or override the terms of the PPA, and MEC remains payable irrespective of the reason for the delay.

The Order marks a shift from automatic revocation towards a structured, compensation-based extension mechanism, while preserving the objective of ensuring timely utilisation of scarce transmission connectivity. By linking additional time to demonstrated project progress and progressively increasing MEC with the duration of delay, CERC seeks to provide limited flexibility to genuine developers while discouraging prolonged retention of unused connectivity.