TERI opposes Odisha's demand for free power

Demand for free power was stiffly opposed by independent power producers

The Energy Resources Institute (TERI), a Delhi based organisation dealing with sustainable use of finite resources, has raised reservations over Odisha’s demand for free power from thermal power plants and energy stations based on coal washery rejects.

“TERI is not okay with the demand for free power raised by the state government. It has instead suggested availability of power at a subsidised rate but the quantum has not been specified,” said a source at the energy department.

The Planning Commission had urged TERI to conduct a study on the issue after Odisha and some other coal bearing states pitched for free power from coal-based power plants coming up in their respective states.

It may be noted that Odisha had demanded 25 per cent free power from coal-based power plants and 33 per cent free power from power plants based on coal washery rejects.

Later, the state government is understood to have scaled down its power demand from plants based on washery rejects to 13 per cent in line with the provision under National Hydro Policy.

The demand was also stiffly opposed by the independent power producers (IPPs) who argued that the condition of supply of free power will make the power projects unviable.

A team of TERI had recently visited Odisha for a study on equitable sharing of benefits arising from coal mining and power generation amongst resource rich states. The objective of the study was also to examine the impact of allowing free power at variable cost from coal based plants in the host state.

TERI has sought information from the state government on various facets of the power sector like capacity of coal-based power plants, state share of power from these units, cess (if any) levied on the generators, current rate of electricity duty on consumption and tariff at which electricity is supplied from the power plants.

Earlier, the state energy department had sought the intervention of the Planning Commission for a quick decision on demand for free power by coal rich states.

Justifying its demand, the Odisha government had pointed out that while states consuming the power and coal from the host state get benefited, the host state gets a nominal advantage of limited employment opportunity and also a very low royalty on coal.

Both coal mining and power generation being in the manufacturing sector, hardly any ancillary industry gets developed around these activities. The above situation leads to an inequitable sharing of cost and benefits from coal mining and power generation.