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Higher power rates not to hit state utilities

Shreya Jai  |  New Delhi 

Power sector

Consumers of Tata's ultra mega power project (UMPP) and Adani's power plant at Mundra in Gujarat might not see a major escalation in their procurement price after the Appellate Tribunal for Electricity (APTEL) gave its nod to include compensatory rate in the final rate of sale of power.

The beneficiary utilities in Gujarat, Haryana, Rajasthan, Punjab and Maharashtra are already buying power for Rs 3.61 to Rs 3.7 a unit, according to the annual revenue requirement reports submitted to state regulators.

The levelised tarifforiginally offered by Tata's imported coal-based UMPP is much lower at Rs 2.26, but after the compensatory tariff of 52 paise, it would work out to Rs 2.8. Power from Adani's Mundra plant would cost Haryana Rs 2.39 after compensatory tariff the component and Gujarat Rs 2.09.

The 1,980-Mw plant was earlier offering levelised rates of Rs 1.96 to Haryana and Rs 1.38 to Gujarat. The plant, completely dependent on costly imported coal, got a breather from the government when it allocated 30 per cent domestic coal linkage to it in January this year. Paucity of domestic supply of coal and escalating price of imported coal led to the company petitioning the Central Electricity Regulatory Commission (CERC) to add compensatory rate in its final rate of power sale. CERC, in its February 2014 ruling, revised the rates by 43p for Haryana and 71p for utilities in Gujarat.

"After adding other variables, the final energy cost that Gujarat would pay to Tata would be Rs 2.9 to Rs 3 a unit. This is less than our average rate of power purchase, which is Rs 3.61 but higher than the rates offered by NTPC at its Korba and Vindhyachal power plants," said a senior official of Gujarat Urja Vikas Nigam limited (GUVNL). He said GUVNL was procuring power from NTPC at Rs 2.25 because the three power plants are decades old, having less fixed cost burden.

"In comparison to the contemporary power plants, the rate of power offered by Tata Mundra is still quite competitive," said an official of a utility in Rajasthan.

Tata Mundra UMPP has signed power purchase pacts with GUVNL, Maharashtra State Electricity Distribution Company, Ajmer Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam, Punjab State Power Corporation, and Haryana Power Generation Corporation. Adani has power purchase agreements (PPA) with two utilities each of Gujarat and Haryana.

On Monday, APTEL upheld the decision taken by CERC in February this year, allowing Tata Mundra UMPP and Adani Power to charge compensatory tariff from consumers.

Compensatory tariff is added in the levelised tariff offered by a power producer, and is on account of variable costs such as fuel. In its petition to the CERC, Tata Mundra UMPP admitted that the cost of imported coal from Indonesia has increased and the state utilities buying power need to pay for the escalation in production cost.

Levelised tariff is the rate offered by the power project developers when they submit their bids. This is only a tariff to evaluate the various bids and decide a winner. Actual tariff differs on the basis of escalation of various tariff components, including fuel cost, at any point of time during the tenure of the PPA (23 years in case of both the power plants).

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

Of the four UMPPs of 4,000 Mw each, being built across the country, Mundra and Krishnapatnam (Reliance Power) are sourcing imported coal for their fuel requirement and their levelised tariff are Rs 2.26 per unit and Rs 2.33 per unit, respectively. The other two, Sasan and Tilaiya, both built by Anil Ambani-promoted Reliance Power, have their captive coal mines.

UMPPs were announced in 2006 with an aim to scale up power generation in the country.

Gujarat to compare energy costs and then decide

A senior executive at Gujarat Urja Vikas Nigam Limited (GUVNL) said as the state has excess power and is host to both Mundra UMPP and power plants of NTPC, it will see if the power purchased from UMPP fits it bill. “Our major criteria is energy charge and fuel cost. We get power from NTPC at cheap rates. The purchase from UMPP would depend on our demand and comparatively better incentive in the power purchase agreement we have signed with several power producers,” said a senior executive. Gujarat and other states are yet to take a decision on an appeal against the APTEL order. The appellate regulator’s order can be challenged only in the Supreme Court.

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First Published: Wed, July 23 2014. 00:47 IST