Haryana power utilities in bind over CERC order on compensatory tariff

CERC ordered Rs 409.51 cr compensation from Haryana for Adani Power from commissioning date till March 31, 2013

The latest order by Central Electricity Regulatory Commission (CERC) dated February 21 regarding the continuation of the methodology for determination of compensatory tariff for Adani Power's 4,620 MW Mundra Thermal Power Plant to its previous order of April 2013 allowing tariff revision by Tata Power may put the Haryana power utilities in a tight spot.

The CERC has ordered approximately Rs 409.51 crore compensation from Haryana for Adani Power from the commissioning date till March 31, 2013. The amount is to make up for the losses incurred by the Adani project in the wake of Indonesian regulation on higher cost of imported Indonesian coal.

The power utilities in Haryana are already reeling under Rs 18,000 crore of short-term liabilities as on 31 March, 2012.

In January 2014, the Bhupinder Singh Hooda led Congress Government in the state announced a tariff relief for the residents of the state by committing to no power tariff revision in the financial year 2014-15.

Despite a huge gap between the average revenue realised and average cost of power supply and a transmission and distribution loss of 25 per cent the state government resorted to populist measures as the ruling government is on the threshold of Lok Sabha and Assembly elections.

The details of exact value of compensation towards the Tata Power were not available but a tariff revision from Rs 2.26 per unit to Rs 2.78 would be implemented as per the new order.

The sources in the power companies informed that the revision in tariff was imminent as the coal price (of imported coal) increased by 150 per cent in the two years.

The Haryana power Minister and Secretary Power did not respond to queries by Business Standard but the sources close to the development told that at this juncture the state government may try to defer the power tariff revision.