Tariff orders for NTPC could lead to under-recovery in energy charge: Ind-Ra

The energy charge rate approved by CERC, is 20-31% lower than what was sought by NTPC

The latest tariff orders for some plants NTPC could lead to significant under-recoveries on fuel cost on account of a lower energy charge rate, India Ratings and Research (Ind-Ra) said in a report.

This pertains to the energy charge rate (ECR) approved by CERC, which is 20-31 per cent lower than what was sought by NTPC. The difference in the ECR is due to the change in the basis for measurement of the gross calorific value (GCV) of coal to 'as-received" as against "as fired".

CERC is likely to follow the same principle for the rest of NTPC's plants leading to large differences in the fuel cost recovery, said Ind-Ra

"NTPC would contest the same through regulatory process and initiate steps to install the infrastructure for measurement of coal GCV on "as received" basis. There is also a possibility of a dialogue between NTPC and Coal India Limited (CIL) to resolve differences over coal grade slippages," said Ind-Ra.

As per CERC's tariff regulations 2014-2019, coal GCV has to be measured at the point of unloading of the coal at the power station gate, referred to "as-received" basis compared to the earlier regulations, which allowed measurement of coal GCV at the point before coal is fired, referred to "as-fired" basis.

In its petition to CERC, NTPC had been highlighting the lack of infrastructure at its plants as the reason for its inability to measure coal GCV on "as-received" basis. Therefore, CERC, in the absence of data on "as-received" basis, has now considered the GCV on "as-billed" basis while arriving at the ECR leading to the consideration of a higher GCV rate.

The difference between the GCV on "as-received" and "as-fired" basis is governed by the ambient temperature, type of coal and duration for which coal is stored.

As per the Central Electricity Authority of India, the heat loss during such time should not be more than 0.1 per cent in GCV value, which is in line with international studies. However, in this case the difference between the GCV of the coal works out to 20-31 per cent.