Under the PoC mechanism, monthly transmission charges are allocated in advance, based on quarterly projection provided by discoms. These charges, which are paid by multiple beneficiaries (power generators, discoms), have been increasing from about `10,000 crore/year in 2011 to about `36,000 crore/year in 2019.
Private power producers want the electricity regulator to revise the tariff norms for using inter-state transmission systems (ISTS), as the current ‘opaque’ system is proving to be a big burden on them, discoms as well as end-consumers.
These ISTS charges, also called PoC (point of connection) charges, have increased 52% since Q1FY17 to `2,888 crore per month in Q3FY19. Also, tariffs vary disproportionately among the states – for instance, the rate is as low as `0.21/unit in Tamil Nadu while it is `0.80/unit in neighbouring Andhra Pradesh.
In a letter to the Central Electricity Regulatory Commission (CERC), the Association of Power Producers (APP) has said: “The prevalent method of PoC charges determination is an opaque process where the load flow studies are not provided to customers/ stakeholders.”
Under the PoC mechanism, monthly transmission charges are allocated in advance, based on quarterly projection provided by discoms. These charges, which are paid by multiple beneficiaries (power generators, discoms), have been increasing from about `10,000 crore/year in 2011 to about `36,000 crore/year in 2019. Among other reasons, PoC charges increase when any entity which agreed to use the transmission system on a long-term basis relinquishes its contracted capacity without paying surrender charges.
High-capacity power transmission corridors had been built for about 40,608 MW capacity envisaged for 48 private power plants. Due to various reasons, 57% of this capacity have been relinquished, contributing to a surge in PoC charges for the remaining and existing users. A CERC task force formed to review the methodology of computing ISTS charges has submitted its report to the regulator.
The PoC methodology came into place after radical changes were effected in the electricity sector with the introduction of competition through the Electricity Act, 2003. Sector experts have said transmission pricing remains a contentious issue as teething problems associated with this system never seemed to have ceased cropping up as the sector transitioned through structural changes. These PoC regulations were amended in 2015.