GUVNL proposes modification to FPPPA formula, approaches GERC

New formula proposes to allow discoms recover adjustments in tariff in the same year

State power utility, Gujarat Urja Vikas Nigam Limited (GUVNL) seeks to modify the existing formula to calculate Fuel Price & Power Purchase Adjustment (FPPPA) charges. The state utility has filed a petition with the power regulator, Gujarat Electricity Regulatory Commission (GERC) for the same.

The proposed new formula is aimed at overcoming the limitations of the existing formula. As per the petition filed by GUVNL, the existing formula does not allow recovery of difference between actual weighted average cost and base weighted average cost for the distribution companies (discoms).

As per the electricity regulations, the discoms are required to file true-up application of previous year and the effect of any adjustments made in the previous year's tariff is to be given in the aggregate revenue requirement (ARR) of the ensuing year.

"Any increase in fixed cost of GSECL stations for a given year as compared to fixed cost approved for respective year, is not captured in the existing FPPPA formula and would be adjusted after period of two years," the GUVNL petition said.

"This situation impacts financial health and liquidity position of discoms since discoms are required to pay fixed cost as approved by honorable Commission during the year but same is passed on to consumers after two years after undertaking True-up exercise for respective financial year," GUVNL petition said.

The incremental cost paid by the discoms compare to base year for purchase of power from various sources is to be recovered by Discoms as Power Purchase Price Adjustment (PPPA) mechanism.

Under the proposed formula in the GUVNL petition, FPPPA will be recovered in the form of PPPA charge for every unit of the energy consumption and will be forming a part of the energy bill to be served on monthly/bimonthly or any other periodical basis.

"The proposed formula will achieve the ultimate objective of speedy recovery of cost as it takes care of mix as well as the rate variance," GUVNL said in its petition.

The existing FPPPA formula does not provide for recovery of costs due to variation in sources during the year.

"In the current formula we are unable to pass on the changes to the consumers. But, this doesn't mean that after the new formula, power tariff will go up only. At the time of fall in fuel prices and actual fixed costs, the tariff may fall also," said a source in GUVNL.

Meanwhile, GUVNL has revised the FPPPA charges downward from 105 paise per unit earlier to 100 paise per unit for the July-September period.