CERC's new draft electricity tariffs: Little change for power utilities

Among companies, the Power Grid will see a minimal impact since most of its new assets are being built via competitive bidding

The new draft power tariffs released by the CERC imply there will not be much change in the financial dynamics of the power sector once they come into effect in April this year since policy continuity has been maintained.

Investor concerns about lower initial depreciation for back-ended loading of tariffs and lower return on equity (RoE) for transmission assets were restricted to “new assets”, leaving the earnings profile of existing assets unchanged.

The 15.5 per cent rate of regulated return remains unchanged for thermal and transmission assets, while new transmission assets (commissioned after April 1, 2024) will have a lower