In a relief to companies such as Tata Power, the Central Electricity Regulatory Commission (CERC) has decided to fully compensate firms which use imported coal and ran full capacity to meet demand during the time of energy crisis.
The power regulator’s order, which follows a petition filed by Tata Power, would benefit other power producers in the country.
“In order to ensure that the petitioner maintains and operate its plant to generate power for supply to the procurers in compliance with the directions of the ministry of power under Section 11(1) of the Act, the commission under Section 11(2) of the act is required to compensate the petitioner to cover the cost plus a reasonable margin of profit,” CERC said in its order dated January 3.
The ministry, in view of the energy crisis in the country, had issued directions dated May 5, 2022, to all imported coal-based power plant including Coastal Gujarat Power (CGPL, Tata Group’s 4,150-MW coal-fired power plant), to operate and generate power to their full capacity. Further, the plants had to supply power to the procurers first, under power purchase agreements (PPAs), and surplus power could be sold through power exchanges.
In case of companies owning coal mines abroad, the mining profit would be set off to the extent of the shareholding of the company in the coal mine, it had said.
Many of the power producers, using imported coal, had shut down operations then due to surging transportation costs as fuel prices across the world soared. This was when the ministry issued orders under Section 11 of the Electricity Act, 2003 (which deals with emergency supply) to avert a power crisis.
Later, Tata Power had filed a petition stating that the tariff fixed by the ministry was “unjust” as PPAs do not have adequate provision for pass-through of entire increase in global coal prices.
On its part, Tata Power welcomed the order. “The order is also beneficial for the CGPL Mundra plant as it can now recover the full cost incurred for supplying power,” it said
Tata Power expects get 90 paise per kWh for the power supplied from Mundra plant.
“CERC has held that supply of power under Section 11 directions have to cover the variable cost of generation and a reasonable margin as per the appellate tribunal’s (appellate tribunal for electricity) judgement. The operational parametres for computation of energy charge rate (ECR) shall be lower of the actuals or as per tariff regulations, 2009,” Tata Power said.
“Based on the CERC order, the tariff (capacity charge and ECR) would be computed and claimed from the beneficiaries,” it added.
Tata Power’s Mundra power plant, which was commissioned in March 2013, uses imported coal from Indonesia to produce power.