Electricity regulator's compensatory tariff not to burden firms, consumers: Care
The Central Electricity Regulatory Commission's order for compensatory tariff to Tata Power and Adani Power has not only provided relief to producers but also ensured that distribution companies and consumers are not burdened by higher tariff, according to a report by rating agency Care.
Electricity regulator CERC has directed the states to pay a compensation of Rs 329.45 crore to Tata Power and Rs 829 crore to Adani Power for a period from April 1, 2012 to March 31, 2013 for their past losses arising out of higher coal imports.
It has also allowed a gross compensatory tariff of Rs 0.53 per unit for Tata Power, which supplies power to Gujarat, Haryana, Maharashtra, Punjab and Rajasthan, while a provisional gross compensatory tariff of Rs 0.85 per unit for Gujarat and Rs 0.36 for Haryana for Adani Power.
"These tariffs still remain within the range of 25-50 per cent of merit order dispatch for all the discoms. Thus, discoms stand to gain even after compensatory tariff hikes as most of recent Case-1 and Case-2 bids are being clinched at higher tariffs Rs 4.5-5 per unit," the rating agency's report further said.
At present, Gujarat draws 1,805 MW from Tata Power and 1,000 MW from Adani Power, while Haryana gets 380 MW and 1,424 MW, respectively, from both the power producers.
The average increase in tariff for Gujarat will be 2.1 per cent, while for Haryana it will be a mere 0.2 per cent, the ratings agency said.
On the other hand, for Maharashtra (760 MW), Punjab (475 MW) and Rajasthan (380 MW), the tariffs will increase by 0.3 per cent, 1.6 per cent and 0.6 per cent, respectively.
"The orders have also built a consensus among the stakeholders for providing relief to developers against a sharp rise in Indonesian coal prices through a mechanism of compensatory tariff, which is outside the purview of PPA. The hike, therefore, allows near complete recovery of fuel cost and hence eliminates fuel risk," Care said.
It also noted through the judgement, the electricity regulator has managed to do a fine balancing act of preserving project viability for developers without disturbing sanctity of PPA and creating a mechanism for optimising discom power purchase costs, thereby reducing tariff shock to consumers.
"Contrary to popular belief, even after compensatory tariff hike, the project tariffs still remain fairly competitive for discoms with tariffs at Rs 3.03 per unit for Tata UMPP, Rs 2.90 per unit for Adani Power Phase-III (Gujarat PPA) and Rs 3.03 per unit for Adani Power Phase-IV (Haryana PPA)," the ratings agency noted.
