Millennium Post

Raj discoms oppose CERC tariff order ‘favouring’ Tatas, Adanis

Rajasthan has petitioned Appellate Tribunal for Electricity (APTEL) challenging the Central Electricity Regulatory Commission's order granting compensatory tariff to two Mundra projects of Tata Power and Adani Power. Rajasthan in its petition said that there is no provision in law providing for compensatory tariff. ‘In fact there is no tariff determination under the Electricity Act for tariff based competitive bidding process.’

Three power distribution utilities in the state of Rajasthan — Ajmer Vidyut Vitaran Nigam, Jaipur Vidyut Vitaran Nigam, Jodhpur Vidyut Vitaran Nigam —have appealed to the Appellate Tribunal for Electricity urging it to set aside CERC order on compensatory tariff for Tata Power and Adani Power's projects at Mundra in Gujarat.

The CERC allowed Tata Power and Adani Power higher tariff and total compensation amounting to more than Rs 1,100 crore for their Mundra projects in Gujarat. Rajasthan discoms in their appeal said, ‘CERC can revise tariff only with reference to Force Majeure, Change in Law or matters relating to the application of escalation for escalable tariff.’
‘CERC erred in considering the reduced price considered by Tata Power during bid though there was no firmed up coal supply agreement for supply at the discounted price,’ it said.

The petition added that the difference between the cost of coal at $70 (bid price worked backwards) and the cost of actual imported coal can alone be the zone of consideration if any compensatory tariff needs to be considered.

‘The residuary value of the entire power project at the expiry of the duration of the PPA should also be adjusted while determining compensatory tariff,’ it added. Tata Power runs a 4,000-MW ultra mega power project at Mundra, while Adani Power operates a 4,620 MW plant. Tata Power won the bid for the Mundra plant in 2007 by offering a levelised tariff of Rs 2.26 per unit for 25 years.

The CERC said the higher tariff would be imposed with retrospective effect from 1 April, 2013, entitling Tata Power to recover Rs 329.45 crore and Adani Power almost Rs 830 crore from customers. Last year, CERC had agreed that tariffs should be increased for both companies and set up a panel to work out the compensatory tariffs to mitigate the impact of higher overseas coal prices.

The panel, headed by eminent banker Deepak Parekh, had submitted its recommendations to CERC last August. Other power procuring states —  Maharashtra, Haryana, Punjab and Gujarat have also received approvals from their respective Cabinets to challenge the CERC decision before the electricity tribunal. Tata Power's Mundra plant sells power to customers in the states of Maharashtra, Haryana, Punjab, Gujarat and Rajasthan.
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