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Home News Power Sector News Supreme Court cancels compensatory tariff order for Adani and Tata

Supreme Court cancels compensatory tariff order for Adani and Tata

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Supreme CourtIn a major relief to Gujarat, Haryana, Rajasthan, Punjab, and Maharashtra, the Supreme Court on 25-08-2014 stayed an order allowing Tata Power and Adani to charge higher tariff on account of rise in the coal cost. Responding to the petition by the power distribution utilities of Haryana, the apex court stayed the Appellate Tribunal of Electricity (APTEL)'s interim order on compensatory tariff, and asked the tribunal to finalise the matter expeditiously.

The levelised tariff originally offered by Tata Power's 4,000-Mw ultra-mega power project (UMPP) was Rs 2.26 a unit, but after adding the compensatory tariff of 52 paise, it would have been Rs 2.8 a unit. Power from Adani's Mundra 1,980-Mw power plant would have costed Haryana Rs 2.39 after compensatory tariff component and Gujarat Rs 2.09.

By drawing higher tariff after March 2014, Tata's Mundra UMPP would have fetched the company Rs 25,000 crore and Adani's project an additional Rs 18,500 crore over its remaining life.

"Coastal Gujarat Power Limited (CGPL) has been delivering competitive power across the five beneficiary states despite having under recovery on fuel charges. CGPL will do its utmost to continue to buy coal and honour its commitment towards the nation's energy security by providing reliable and competitive power supply through the project. As the case is already being heard by the APTEL, the company would await a quick resolution of this issue through the required judicial process," said a Tata Power spokesperson.

Tata Mundra UMPP, which sources imported coal for fuel needs, has signed power purchase pacts with Gujarat Urja Vikas Nigam, Maharashtra State Electricity Distribution Co, Ajmer Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam, Jodhpur Vidyut Vitran Nigam, Punjab State Power Corporation and Haryana Power Generation. Adani has power purchase agreements with two utilities each of Gujarat and Haryana.

Compensatory tariff is added in the levelised tariff offered by a power producer, and is on account of variable costs such as fuel. In its petition with the Central Electricity Regulatory Commission (CERC), Tata Mundra UMPP admitted the cost of imported coal from Indonesia has increased and the state utilities buying power need to pay for the escalation in production cost.

The CERC had in February ruled power-generation companies should be allowed to adjust the compensation arising out of increasing cost of domestic fuel and rising dependence on costly imported fuel.

Source- Business standard


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