Higher power rates due to low plant utilisation, say Par panel

Low capacity utilisation of power plants is the prime reason for high electricity tariffs, a Parliamentary panel has said in a report.
"The committee are of definite opinion that the prime reason for higher tariff is lower PLF (plant load factor or capacity utilisation)," Parliamentary Standing Committee on Energy said in its report tabled in Parliament today.
The panel noted that the power sector seems to be trapped in vicious cycle of low PLF causing high tariff and high tariff suppressing the demand.
It observed that PLF of thermal power plants touched record low and dipped below 60 per cent during the previous year and several of those are running at 0-40 per cent of PLF.

The committee said that it is not a desired scenario as it is known that under utilisation of power plants will only lead to higher tariff rates.
It observed that despite abundance of power generation capacity in the country at present, the tariffs have not gone down, rather there is an increasing trend in this regard.

The panel is of the view that it is in favour of promoting competition in the sector but the Power Ministry should ensure that this transition should take place without harming and discouraging further investments in power sector.
About hydro sector it said that instead of isolated efforts there is an urgent need for comprehensive plant for alleviating the concern of this sector by providing long term finances at lower rates, grant of clearances in a time bound manner, development of enabling infrastructure, improving law and order situation and sensitisation of local people about the benefits of projects development.

Yesterday, Power Minister Piyush Goyal had told the Lok Sabha that of 44 hydro electric projects (HEP) above 25 MW under construction presently, 20 plants totalling 6,329 MW are stalled/stressed and an amount of Rs 30,147.08 crore has already been spent on these HEPs.
The panel said that the government should make all efforts that can boost the demand of power by providing electricity access to all households, bringing down tariff of electricity etc.
It also said that the price discovery for any kind of electricity whether thermal, hydro, renewable, etc., should be done through process of competitive bidding only in view of keeping hydro power out of the purview of this system.

The panel said that the definition of electrified villages should be amended and a village should be treated as electrified only after the 100 per cent electrification of the entire village is done.
At present, a villages is declared electrified if among other required infrastructure it has at least 10 per cent of its households electrified.