Allow power tariff hike to pass-through environment norms cost: Govt

Coal-based thermal power plants' tariff will rise in coming days because the government has decided to allow pass-through of cost incurred by them for meeting environment norms notified by the environment ministry in December 2015.

"...to ensure timely implementation of new environment norms, the central government has decided that the additional cost implication due to installation or upgradation of various emission control systems and its operational cost to meet new environment norms...shall be considered for being made pass through in tariff by the commission," the power ministry said in a letter written to power regulator Central Electricity Regulatory Authority (CERC).

The ministry said that the respective thermal power plants may approach the appropriate commission (power regulator) for approval of additional cost on account of this change in law.

The ministry also said that the CERC shall develop a mechanism to address impact on tariff and certainty in cost recovery on account of additional capital and operational cost under concluded long and medium-term power purchase agreement for this purpose.

The ministry said that the direction is being issued to facilitate smooth implementation of revised emission standards for thermal power plants.

However, the ministry said that the pass-through of cost for upgradation of power plants under new environment norms as change of law would not be applicable where tariff is determined under Secton 63 of the Electricity Act.

Under the Section 63, the tariff is determined through competitive bidding. Therefore the pass-through would be allowed in case of power plants with feed in tariff only and not where it was determined through competitive bidding.

The pass-through of the costs would also be not allowed in cases where such requirement of pollution control system was mandated under the environmental clearance of the plant or envisaged otherwise before notification of amended rules (new norms).

The environment ministry brought new norms for coal-based power stations to cut down emissions of particulate matter(PM10), sulphur dioxide (SO2) and oxides of nitrogen (NOx) and improve the ambient air quality around power plants.

The ministry had for the first time fixed SOx and NOx norms for power stations and mandated that plants adhere to these guidelines by 2017. However later central electricity authority chalked out at detailed plan to retrofit old plants with required equipment to meet new norms with a deadline ranging from 2020 to 2024.