Economy

Mundra tariff issue: CERC asks States to respond in 4 weeks

Our Bureau New Delhi | Updated on March 12, 2018

This move by the electricity commission may further delay revision in electricity tariffs from stations run by Tata Power (4,000 MW) and Adani Power (4,620 MW) at Mundra in Gujarat.

The Central Electricity Regulatory Commission (CERC) has asked the five States to respond in four weeks to recommendations made by a high-level panel headed by Deepak Parekh that proposed increasing tariff for imported coal-based thermal stations of Tata Power and Adani Power.

The States include Gujarat, Maharashtra, Punjab, Haryana and Rajasthan.

This move by the electricity commission may further delay revision in electricity tariffs from stations run by Tata Power (4,000 MW) and Adani Power (4,620 MW) at Mundra in Gujarat.

Meanwhile, the CERC has also directed the panel's recommendations to be published in public domain.

This is being decided at the hearing at CERC in the Capital on Friday.

Last month, the Parekh panel submitted two separate reports for the respective private power producers.

CERC had returned the recommendations submitted by the Parekh panel because it was not signed by all stakeholders.

According to industry watchers, the States may have to get the recommendations approved from their respective Cabinets. This is done to prevent any legal hurdles if CERC accepts the recommendations leading to tariff hike but the States oppose.

If the panel's recommendations are approved by the CERC, in the current scenario, Tata Power may get a ‘compensatory tariff’ of 45-55 paise for its 4,000 MW Mundra plant, while Adani Power may be allowed to increase tariff by 50-60 paise for its 4,620-MW at the same place.

However, these compensatory tariffs are linked to international coal prices and also the revenue generated from the coal mines from where these companies have bought stake and source coal to feed the power plants.

Moreover, a third party auditor would review the compensation every quarter.

The Commission’s decision to permit a tariff increase will affect consumers of seven electricity distribution utilities in Gujarat, Maharashtra, Rajasthan, Punjab and Haryana.

On April 3, CERC offered a ‘compensation package’ to cover the rise in cost of electricity production for Adani’s power plant its 4,620-MW Mundra plant. In its order, the CERC called for setting up a committee within a week that would suggest various measures that can be taken up. The panel was asked to submit its report to the regulatory commission by April 30.

The Gautam S. Adani-promoted power company had petitioned the CERC that because of the rise in price of Indonesian coal, which the company imports to run its power plant, it had become economically unviable to sell electricity to Gujarat and Haryana State utilities at rates decided in 2007-08. The rates were derived through a competitive bidding process.

A similar order was passed on April 15 for 4,000 MW ultra mega power project at Mundra. The revised tariff will be in addition to the existing levelised tariff of Rs 2.26/unit.

>siddhartha.s@thehindu.co.in

Published on September 13, 2013

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