Cogeneration units linked to cooperative sector sugar mills in Tamil Nadu cannot claim a favourable tariff as compared with other counterparts in the State.

The Tamil Nadu Electricity Regulatory Commission on Tuesday ruled that cogeneration power plants linked to the 10 cooperativesugar mills and two public sector mills totalling a generation capacity of 183 MW will get the tariff outlined in its Order 4 of March 31, 2016, for cogeneration plants in the State. They cannot claim a dual tariff, it said.

Fixed cost

In the order, it has set a fixed cost of ₹2.76 a unit for 20 years and a variable cost for the first two years at ₹2.76 for 2016-17 and ₹2.89 for 2017-18 for surplus power they export to the grid.

This means the first year tariff is ₹5.58 a unit and ₹5.65 in the second year and will vary with the variable cost set every two years.

Delivering the order on a bunch of petitions from the cooperative and public sector sugar mills, the Commission said two separate tariffs cannot be set for cogeneration plants which use bagasse, the fibrous material from sugarcane, as a fuel during the sugarcane crushing season and coal during the off-season.

The mills with the newly set up cogeneration plants had petitioned that the Commission set a tariff of ₹5.45 a unit when using bagasse as fuel and ₹9.82 when they use coal during the off-season.

The Commission also said that non-bagasse fuel cannot exceed 15 per cent of the total fuel used annually in cogeneration plants to avail the benefits of a favourable tariff set for them as renewable energy source.

Leasing of sites

This order clears the air regarding cogeneration plants in the cooperative and public sector mills which are considered key for viable operations. Tamil Nadu passed an order in February 2008 for the projects to be set up in the cooperative and public sector mills at a total cost of ₹1,241 crore.

Since the sugar mills were cash strapped, they entered into an agreement with the utility which provided for the mills to lease the cogeneration sites to the Tamil Nadu Generation and Distribution Corporation (Tangedco), by mortgaging the land. Once the power plant is commissioned, the sugar mills, which provide bagasse as fuel for power generation, will run the plant. Tangedco would repay the loan and reimburse the sugar mills the operational and other charges. Once the debt is fully paid, the asset will be transferred at a depreciated cost to the sugar mill.

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