Adani, Tata get APTEL nod for Rs 43,500-crore boost

The Appellate Tribunal for Electricity (APTEL) has allowed Tata Power and Adani Power to charge higher rates from state utilities since March this year, on account of a rise in the cost of imported fuel.

Upholding a landmark order of the Central Electricity Regulatory Commission (CERC), APTEL, however, disallowed the companies' plea to collect arrears before March this year. According to an estimate, dues for Tata Power's 4,000 Mw Mundra plant in Gujarat before last March are Rs 330 crore, and Adani's 1,980 Mw Mundra plant has arrears of Rs 830 crore.

After March 2013, Tata's Mundra ultra-mega power project will be awarded a compensatory rate at 52 paise per unit, which will fetch the company Rs 25,000 crore over the life of the plant. Adani's project will get compensatory tariff at 41 paise per unit, or Rs 18,500 crore over its remaining life.

CERC had in February this year come out with a compensatory rate solution for the two companies, after they had appealed for higher ones. Five states that purchase power from these plants had appealed against the CERC order.

The compensatory tariff awarded by APTEL is the same as calculated by CERC at 52 paisa per unit. Coastal Gujarat Power Limited has power purchase agreements with distribution companies in Gujarat, Rajasthan, Maharashtra, Punjab and Haryana to sell power generated from Tata's Mundra UMPP at Rs 2.26 per unit. Coastal Gujarat Power Limited is a special purpose vehicle set up by Tata Power to implement the Mundra UMPP.

Tata Power, however, said the compensatory rate was quite low and this could lead to power rates rising in states buying power from its UMPP. "The indicative compensatory tariff (rate) of Rs 2.8 a unit is much lower than the average purchase price in all five states. Hence, providing replacement power at a cost more than Rs 4.1 a unit, could leave all five states prone to load-shedding and mean tariffs higher by at least Rs 1 for all such states," said a statement issued by Tata Power on the interim order issued by APTEL.

Tata Power also said APTEL's order had directed that from March 1, procurer states make electricity payments to the Mundra UMPP at the revised rates, until a final order.

"The generating plants, including Mundra UMPP, are to keep an account of the amount received by them from procurers as compensatory tariff until further notice. The next hearing of the matter is scheduled on August 19," said the statement.

For its Mundra project, Adani Power has two power purchase agreements with the state utilities of Gujarat and Haryana.

The company refused to comment on the development.

The CERC has ruled power generation companies should be allowed to adjust the compensation arising out of increasing cost of domestic fuel and rising dependence on costly imported fuel.

"The petitioner is suffering on account of unforeseen events leading to an increase in international coal prices. As and when the hardship is removed or lessened, the compensatory tariff should be revised or withdrawn. This is the most pragmatic way to make the PPAs workable while ensuring supply of power to consumers at competitive rates," said the CERC order dated February, 21, 2013.

"Earlier it was only CERC, but now even APTEL has accepted the concept of compensatory tariff. Such decisions remove uncertainty on tariffs and future investments. This will stop the extent of further bleeding of power producers who have invested in power generation, when the fuel cost is on a rise," said A K Khurana, director-general of the Association of Power Producers.

Reliance Power has also filed petitions with the CERC for compensatory rates for its three UMPPs in Sasan, Tilaiya and Krishnapatnam. The matter is pending with the regulator.

A senior executive at one of the leading private power producers said this decision would pave way for a similar stand on rights of levying compensatory tariff by electricity generation companies.

THE RULING
The Appellate Tribunal for Electricity upholds CERC's decision on Tata Mundra UMPP and Adani Power's Mundra power project

• Ensures benefit of Rs 25,000 crore for Tata and Rs 18,500 crore for Adani
• Discoms don't have to pay retrospective charge of Rs 330 crore to Tata and Rs 830 crore to Adani
• Gross compensatory tariff set at 52 paisa a unit
• Tata Mundra UMPP (4,000 Mw): Power purchase pacts with Gujarat Urja Vikas Nigam, Maharashtra State Electricity Distribution Co, Ajmer Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam, Punjab State Power Corp and Haryana Power Generation
• Adani's Mundra power plant (1,980 Mw): Power purchase pacts with Gujarat Urja Vikas Nigam, Uttar Haryana Bijli Vidyut Nigam and Dakshin Haryana Bijli Vidyut Nigam