Tata, R-Infra asked to explore PPA options

Mumbai's peak power demand is expected to increase to 4,108 Mw in 2019-20, from 3,760 Mw now. Maharashtra Electricity Regulatory Commission (MERC) has, therefore, asked the two leading distribution companies, Tata Power and Reliance Infrastructure (R-Infra), to explore alternatives such as medium-term and long-term power purchase, through competitive bids, not continue to only tie-up with their respective group generation companies.

Tata Power’s distribution wing’s (Tata-D’s) agreement for power purchase from the group company's generating station at Trombay is ending in 2018. And, R-Infra D's agreement for power purchase from the group company's generating plant at Dahanu ends the same year. 

Tata Power has a consumer base of about 600,000. R-Infra distributes power to three million consumers in Greater Mumbai. MERC, in its rate revision order of last week, approved an average cut of 1.93 per cent for R-Infra and a 1.85 per cent rise, including regulatory asset charges, for Tata Power for 2016-17 in Mumbai. It has directed both distribution companies to approach it for approval of their future power procurement.

Tata-D said as the available transfer capability of the  transmission corridor was not sufficient to meet overall Mumbai peak demand, utilisation of embedded generation of the Mumbai system was essential to meet the overall Mumbai peak demand. Further, the company has cited several advantages of so tying up power, including reliability and islanding in case of a failure outside the Mumbai power system. Also, that additional charges on account of inter-state transmission and losses in such transmission would reduce the price competitiveness of any power bought from outside Maharashtra.

R-Infra D argued power purchase from the group company's Dahanu unit was beneficial, as this had a much lower fixed cost than newer plants. Also, technically unavoidable due to the islanding requirement of Mumbai. 

R-Infra D had signed a long-term power purchase agreement with another group company, Vidarbha Industries, for 600 Mw, approved by MERC.