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Our Bureau

Chennai, Dec. 23 The Appellate Tribunal for Electricity has set aside the tariff fixed for wind power producers by the Tamil Nadu Electricity Regulatory Commission (TNERC) and directed the Commission to fix a new tariff within two months.

The new tariff is to take into account the ‘time value of money,’ a method of calculating future income and returns from an investment made today.

The tribunal has also directed that the Tamil Nadu Electricity Board should pay the arrears to the wind power generators within two months of the new tariff being determined.

The Tribunal’s order dated December 18, 2007, follows an appeal filed by the Wind Power Producers Association, challenging TNERC’s tariff order No. 3/2006 dated May 15, 2006 and a subsequent order of May 29, 2006 passed in DRF No.1 /2002. Through these orders the TNERC had fixed a levelised tariff of Rs 2.75 a kWh for existing wind energy producers and Rs 2.90 a kWh for new units for the next 20 years.

Reacting to the Tribunal’s order, the Vice-Chairman, Indian Wind Power Association, Mr K. Kasturirangaian, said that this was a positive move for the development of wind power in Tamil Nadu. At the time the tariff was announced, the industry had been hoping for Rs 3.25 a kWh. But the tariff fixed by the TNERC was among the lowest paid in any State and had come as a disappointment. This had resulted in wind power producers opting to invest in other States.

The association had challenged the tariff on the grounds that the methodology of fixing tariff had not taken into account the time value of money. The TNERC had only considered factors like the operation and maintenance charges, insurance, interest on loan, depreciation and return on equity.

The appellants had cited that the electricity regulatory commissions in Gujarat and Rajasthan had taken into account the time value of money.

The Gujarat Commission has fixed a levelised tariff of Rs 3.37 a kWh for 20 years after considering factors like the capital utilisation factor, de-rating plant life, depreciation, escalation of operation and maintenance expenses, debt equity ratio, interest, income tax liability and return on equity.

The Rajasthan Electricity Regulatory Commission had passed an order in March 2007, fixing the tariff at Rs 3.60-3.78 a kWh.

The Tribunal has pointed out in the order that under the Ministry of Non Conventional Energy Sources guidelines the tariff starting at Rs 2.25 a kWh from the base year of 1994-95 would escalate at 5 per cent annually for the next 10 years. But the TNEB, after starting with an average tariff of Rs 2.25 for non-conventional energy, had again pegged the tariff at Rs 2.70 five years later. Even going by the Ministry guideline the tariff would be much higher that that fixed by the TNERC, which has not given any reasons for not following the guidelines.

The Tribunal has said that even if these guidelines are not binding as letters of statute, they “cannot be overlooked according to the whims and fancies of the Commission.” The guidelines cannot be bypassed by simply saying that they are not binding.

According to TNERC officials, they are yet to receive a copy of the order, and they would take appropriate action after studying the order.

More Stories on : Non-conventional Energy | Regulatory Bodies & Rulings | Tamil Nadu

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Tribunal wants new tariff for TN wind power

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