Despite clear clauses in the power purchase agreement (PPA), which allows KSEB to despatch the power station, NTPC is generating power at 100 per cent capacity and feeding the high cost power to the KSEB grid. This has forced the SEB to regulate the generation of cheap hydel power from its various stations.

This assumes significance as the NTPC was asked by the SEB through a board order early this year to despatch the 350-mw combined cycle Kayamkulam thermal power plant. However, NTPC so far did not heed the order and the SEB has yet not invoked the clauses in PPA to despatch the station.

According to sources in the SEB, the PPA allows the SEB to back down the power station without any restrictions. However, despite the order, NTPC has been resorting to 100 per cent generation of its two115 mw units and pumping in 5.52 million units (mus) per day without seeking KSEB's consent.

The cost of power from these open cycle plants costs the SEB a whopping Rs 4 per unit; a fixed cost of Rs 1.4 and a variable cost of Rs 2.6. As per the PPA, the entire fixed cost is realised at 68.5 per cent Plant Load Factor (PLF). The SEB needs to pay the fixed cost alone for that portion of the deemed generation to make up for the shortfall in annual PLF below the benchmark level. The board need not pay any incentive for deemed generation as per the Government of India Order for naphtha power plant issued last year.

At 68.5 per cent PLF, the annual generation from the Kayamkulam plant works out to be 1,380 mus which is equal to 3.78 mus per day. "Therefore, backing down to this level will save Rs 69.6 lakh per day; i.e. Rs 20.88 crore per month or Rs 250.56 crore per year," the source said.

"Since PLF is calculated on an annual basis and since NTPC has been generating at 100 per cent from the very beginning,the SEB has enough cushion to back down to any level during the monsoon season," the source said, adding: "If necessary from January 2000 onwards, the SEB can allow NTPC to step up generation so that at the end of the year the PLF can be maintained at 68.5 per cent."

The source also said the fixed cost payable to NTPC per year does not change with the generation. "Suppose, the SEB does not allow NTPC to generate at all the maximum amount that is payable to NTPC works out to be Rs 193.2 crore (1.4 x 230 x 6), i.e. Rs 16.1 crore per month. Instead, if we had allowed them to generate 68.5 per cent PLF the amount payable to NTPC is Rs 556 crore per year or Rs 46 crore per month. So the saving per month to the board even if we backed down the plant fully and paid deemed generation is Rs 29.9 crore or Rs 358.8 crore per year," the source said.

The additional hydro power generation to make up for the backing down of Kayamkulam plant is estimated to cost the SEB nothing, he added.

According to figuresavailable, with the two units of Kayamkulam plant being operational, the balance between the hydel and thermal power tilted in favour of the latter, accounting for a shade over 25 per cent of the total power generated in the state. This is seen as an unhealthy trend as it pushes up the cost of power purchased by the SEB considerably.

Besides, the SEB and NTPC have not reached a final agreement on the tariff for the Kayamkulam power. The stand off between the two is likely to be referred to the Central Electricity Regulatory Commission (CERC) for arbitration. The Rs 4 per unit asked by the NTPC is considered as very high compared to the power generated by other thermal stations on the same platform.