CERC to compensate imported coal based power plants for high operating cost

The Central Electricity Regulatory Commission (CERC) has decided to compensate imported coal based (ICB) power plants to for supplying electricity at higher cost under forced circumstances. 

In an order on Tuesday, the regulator said that power tariffs of ICB plants should cover their costs and a reasonable profit margin. The development pertains to a petition filed by Tata Power Company Ltd against the tariff fixed by the power ministry after ordering the plants running on imported coal to operate in a bid to avoid a power crisis 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 MoP 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.

The order said that the rate fixed by the power ministry were interim in nature. 

“The rates decided by the MoP read with the clarification of the Commission thereon vide order dated 13.9.2022 are interim in nature and are subject to determination of adverse financial impact by the Commission under Section 11(2) of the Act,“ it said.

In May 2022, amid low availability of domestic coal and high prices of imported coal, the union ministry of power had issued directions under the Electricity Act for ICB power plants to operate and supply power at full capacity. 

Prior to the order ICB plants were largely shut due to high prices of imported coal.

Commenting on the CERC order, Tata Power said in a statement: “Tata Power welcomes the decision of CERC of allowing the imported coal-based Power Plant full compensation of coal cost and operating parameters for supplying electricity under emergency supply under section 11. The order is also beneficial for the CGPL Mundra Plant as it can now recover the full cost incurred for supplying power in terms of the MoP Section 11 directions.”

Query sent to the ministry of power remained unanswered till the story was published.