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Home News Power Sector News CERC proposes major change in tariff structure from FY19

CERC proposes major change in tariff structure from FY19

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CERCThe Central Electricity Regulatory Commission (CERC), which determines tariffs for plants that sell power at ‘cost-plus’ systems, has proposed to introduce a ‘three-part tariff’ structure from the existing ‘two-part’ regime. The regulator has suggested the changes in the recently launched approach paper for the tariff period between FY19-24. The existing two-part tariff structure for coal-based power plants comprise fixed and energy charges. Fixed charges represent fixed cost components, including debt service obligation and risk-free returns, while energy charges represent the fuel costs, which varies according to the market.

The new proposed design wants to introduce a “variable charge” component, which would provide incremental return above guaranteed return and balance operation and maintenance expenses. The variable component could be linked to the difference between availability of the power plant and the quantum of electricity it has dispatched.

CERC regulates 76 GW of capacity under the cost-plus regime and experts have pointed out that NTPC and Power Grid Corporation of India are impacted the most by change in tariff regulations. “Two part tariff operates well in power deficit scenario,” the CERC noted.

Lower-than-anticipated power demand, and a huge generation capacity has led to a situation where coal-based power plants are running at a PLF of around 60%. The proposed changes have been significantly impacted by the high penetration of renewable energy and the lower plant load factors (PLF) at the coal-based generation units.

The National Electricity Plan (NEP), recently published by the Central Electricity Authority (CEA), estimates that PLF) of such power plants would be 56.5% in FY22. The average rate at which states buy non-renewable power is Rs 3.53/unit. The stakeholders have been asked to submit their comments on the proposals to CERC by July 15.

Source- Financial Express


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