SC stays APTEL's hearing on compensatory tariff of UMPPs, will start fresh hearing

APTEL has allowed Tata Power and Adani Power to charge higher rates from state utilities on account of the rise in the cost of imported fuel

Starting afresh the issue of compensatory tariff charged by Ultra Mega Power Projects (UMPP) operators Tata Power and Adani Group, the Supreme Court stayed the proceedings in APTEL and has decided to hold fresh hearing after November 25.

In August, responding to a petition by the power distribution utilities of Haryana, the apex court stayed the interim order of the Appellate Tribunal of Electricity (APTEL) to charge compensatory tariff, and asked the tribunal to finalise the matter expeditiously. While the hearing was being held every day by APTEL, the apex court, responding to an appeal filed by Adani Power on Monday, decided to put a stay on the proceedings at APTEL on Tuesday and start a fresh hearing.

The APTEL has allowed Tata Power and Adani Power to charge higher rates from state utilities since March this year, on account of the rise in the cost of imported fuel. This was in line with Central Electricity Regulatory Commission (CERC) order in February this year with a compensatory rate solution for the two companies, after they had appealed for higher ones.

The five states that purchase power from these plants had appealed against the CERC order. Tata Mundra UMPP, which sources imported coal for its fuel needs, has signed power purchase pacts with Gujarat Urja Vikas Nigam, Maharashtra State Electricity Distribution Co, Ajmer Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam, Punjab State Power Corporation and Haryana Power Generation. Adani has power purchase agreements with two utilities each of Gujarat and Haryana.

Compensatory tariff is added to the levelised tariff offered by a power producer, and is on account of variable costs such as fuel. In its petition with the Central Electricity Regulatory Commission (CERC), Tata Mundra UMPP admitted the cost of imported coal from Indonesia had increased and the state utilities buying power needed to pay for the escalation in production cost.