Power cos should decrease tariff if global fuel prices fall

Power companies which seek hike in tariffs due to global factors should also reduce rates when international coal prices soften, an expert has said.

R V Shahi, former Power Secretary and a power sector expert, said the compensatory tariff is a variable tariff and it should be revised both ways.

Welcoming power sector regulator CERC's order to provide a compensation package to private companies like Adani Power and Tata Power for increase in the cost of international coal, Shahi said, "CERC has recognised, if there is change in Law in Indonesia, which leads to increase in the price of coal from that country for the companies setting up thermal power projects here, they (firms) should be compensated.

"The companies, which are increasing their tariffs due to increase in price of coal from Indonesia, should also revise the tariff downwards if international prices fall."

Earlier this month, CERC (Central Electricity Regulatory Commission) in its order said Adani Power should be granted compensation package for its Mundra project which would provide a cushion against the escalation in cost of imported coal for the plant.

The company had approached CERC last year, seeking revision in tariff from its 1,980-MW Mundra project in Gujarat saying increase in imported fuel cost.

In a similar case, CERC allowed Tata Power to increase tariff from its 4,000 MW ultra mega power project at Mundra.

The Commission has asked the states which buy electricity from Tata Power's Mundra plant to form an expert panel to decide on compensating the firm for higher cost of coal imports from Indonesia.