CERC says no to treating negative bidding amount as fixed cost

Central Electricity Regulatory Commission (CERC) today said it will not allow treating negative bidding amount for coal blocks as fixed cost.
"You cannot shift (the amount of negative bidding) from energy to fixed costs," CERC chairman Gireesh B Pradhan said here today on the sidelines of MCC Chamber of Commerce seminar on power.
Explaining the rationale, Pradhan said, "There are two parts of a tariff - fixed and energy costs. In energy cost (in case of reverse bidding) only things to be considered would be royalty and cess which can be passed to consumers. The rest of energy cost is zero. Now, if you bid zero or minus I would take it as zero only."

"Everybody had bid zero and extraction costs are subsumed in that. We have received direction from the Ministry that in case of Power Purchase Agreements, the final tariff should be less than whatever tariff was earlier decided," he said.
Sources said industry was seeking to transfer the negative bidding amount to fixed cost.