CERC rejects NTPC's plea to revisit tariff norms for 2014-19

NEW DELHI: India's largest power producer National Thermal Power Corporation Limited ( NTPC) will continue to pursue legal action against new tariff determination parameters in the country after the industry regulator rejected its request to reconsider the tariff regulations for 2014-19.

NTPC had approached the Central Electricity Regulatory Commission ( CERC) following a direction from the Delhi High Court and it will now go back to the court, an officer at the state-run company told ET.

While framing the new guideline in December, CERC had altered various parameters and methods for determining power tariff, which NTPC said will impact the return on equity (RoE) of projects. Since then the firm's share price has fallen 11% to a five-year low.


NTPC, which controls over 43,000 mw of country's total power production of 2,49,500 mw, approached Delhi High Court to seek modifications in the tariff guideline for five years starting April 1. The court then directed it to go back to the regulator.

NTPC directors for commercial, finance and technical in May made a presentation before CERC, seeking reconsideration of conditions of gross calorific value on 'as received' basis instead of 'as fired' basis, reduction of gross station heat rate, the scope of auxiliary energy consumption and incentives based on plant load factor instead of plant availability factor among others.

They said deviation from earlier laid down fundamental concepts and methodologies, which are in operation for a long period of time, would cause regulatory uncertainty and be detrimental to promoting investment and augmenting generation capacity.

CERC in its order on June 30, however, said, "The commission did not find any merit in the representation of NTPC to revisit the provisions of 2014 Tariff Regulations. The representation is accordingly disposed of."

An NTPC officer told ET that the company will continue to pursue concerned legal and regulatory authorities to seek changes in the tariff determination parameters.

In its submission the power firm had said, "The existing projects have been set up based on the prevailing regulations and tariff principles at the time of being planned or set up and any change in the basic regulatory approach will adversely impact the revenue and cash flow projections and jeopardise the viability of the project."

It also and expressed concerns over its valuations. Comparable utilities in Asia and other emerging countries are seen earning ROE in the range of 17-21%, which is much higher than NTPC and hence its stock loses attractiveness for investors, it said.