Our Bureau

Chennai, Nov. 10

THE Tamil Nadu Electricity Regulatory Commission (TNERC) has come up with consultation papers for purchasing power from captive power plants and for fixing tariffs for non-conventional energy sources.

As far as captive power plants are concerned, excess power from these plants are sold to the grid at a tariff determined and fixed by the Tamil Nadu Electricity Board. The regulatory commission now hopes to come up with a formula under which the board would pay the captive power generator for the power it buys.

The commission hopes to fix a floor and a ceiling for the tariff that the electricity board, or a distribution licensee, may pay to a captive power producer. That is, the purchase price will be high when the captive power producer supplies to the grid, when the grid needs power the most. Likewise, the purchase price will be low when the power is supplied to the grid at a time when the demand is low, but the electricity board or the distribution licensee is committed to purchasing power.

According to the commission, Tamil Nadu has seen a historical annual growth in energy consumption of five per cent to six per cent in the last 10 years. The State consumed 40,638 million units (MU) of power during 2004-05, when the gross generation was 52,345 MU. With a spinning reserve of 500 MW - Tamil Nadu's total capacity, including from Central generation stations, as on September 30, 2005, was 9,550 MW - the net deficit would be 629 MW in 2005-06 and the corresponding energy shortage 1,130 MU.

The commission's draft paper on captive generating plants points out that there are 22 operational captive plants as on March 31, 2005, in the State with a total capacity of 432 MW. Five more captive plants with a total capacity of 297 MW are to be commissioned during this year.

With the Electricity Act, 2003, providing opportunities for more captive power plants to come up, the commission notes that there is an opportunity to harness the excess saleable capacity with captive plants, which could be used to bridge the demand-supply gap.

According to the commission, the rate of purchase of captive power shall be linked to the prevailing grid frequency and subject to a band of a minimum (floor) and a maximum (ceiling) rate of purchase. It has calculated this band as Rs 2.30 per unit to Rs 3.80 per unit.

As far as non-conventional energy sources are concerned, the commission's draft discussion paper seeks views on setting tariffs. The electricity board now pays a fixed tariff Rs 2.70 per unit for wind energy, for example.

The commission has thrown up some suggestions on fixing tariffs for renewable power: Whether it should be as per the guidelines of the Ministry of Non-Conventional Energy Sources, where a percentage increase is allowed each year up to a certain level; or, whether cost plus tariff can be adopted; or a model similar to that in Maharashtra where existing and proposed wind energy projects are grouped separately and two different tariffs fixed; or whether the tariff can be project specific.

The commission has also proposed a reduction in the transmission and wheeling charges for biomass and cogeneration projects. Biomass projects now attract transmission and wheeling charges of 10 per cent, which the commission's paper suggests can be reduced to two per cent for within 25 km of usage and seven per cent for beyond 25 km of usage. In the case of cogeneration projects, the commission has proposed to retain transmission and wheeling charges at two per cent for within 25 km of usage and reducing it to seven per cent from 10 per cent for usage beyond 25 km.

According to the commission, the total renewable energy generation is equivalent to 16.68 per cent of the total consumption and procurement 8.25 per cent. The commission says it should be made obligatory for the distribution licensee to procure a minimum of 10 per cent of its total power consumption from renewables.

(This article was published in the Business Line print edition dated November 11, 2005)
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