Fuel cost pass-through: Govt panel allows 6 gencos to raise charges by up to 20 paise a unit

A government panel set up to fix variable tariffs has allowed Tata Power, Essar Power, JSW Energy and three others running power projects using imported coal to raise charges by up to 20 paise a unit.

This is less than the increase sought by some of the power producers. Through tariff increases, the government aims to mediate between the buyers and sellers to start generation quickly. The parties have an option to adopt this tariff, decide mutually or allow plants to sell on the power exchanges. The six plants have a cumulative capacity of 9.1 GW.

The committee has suggested ₹6.22 per unit compared with ₹6.05 per unit earlier for the 4 GW Mundra ultra-mega power project run by Tata Power. The company had sought ₹9.11 per unit variable tariff from the Central Electricity Regulatory Commission (CERC). The plant has a fixed tariff of 90 paise.


A senior government official said the price of imported coal fell by about $2 per tonne last week from a high of $140 per tonne.

Essar's 1.2 GW Salaya plant in Gujarat will get ₹7.08 per unit against ₹6.88 per unit earlier. The plant is likely to restart by the month-end once coal arrives.

The Centre had invoked the emergency clause provided under Section 11 of the Electricity Act to ask 13 projects to import coal and start generation as the country faced record electricity demand last month. These plants had stopped generation after imported coal prices rose and there were no buyers for the costlier power, putting pressure on domestic coal.

The power producers had sought higher tariffs than those suggested by the panel on May 13. The benchmark prices are subject to revision every fortnight.

Sec 11 Invoked Again in May
Tata Power is the only operational one among the six imported coal plants for which the Central Electricity Authority-led committee suggested variable tariffs. JSW Energy's 300 MW Ratnagiri plant has been recommended Rs 6.71 per unit against Rs 6.52 per unit now. Meenakshi Energy's 300 MW plant at Thamminapatnam in Andhra Pradesh will get the highest Rs 7.24 per unit energy charge against Rs 7.03 per unit. Coastal Energen and IL&FS Tamil Nadu Power Co. Ltd of 1.2 GW each, both located in the southern state, have been recommended a variable tariff of Rs 6.80 per unit against Rs 6.60 earlier.

The Union power ministry on May 26 invoked Section 11 for the second time in a month to allow compensation to domestic coal-based power projects with a capacity of 32 GW for higher costs due to the blending of imported coal with local supplies until March next year.

The ministry on Saturday issued a letter informing all power generation companies that Coal India will aggregate coal demand for blending purposes and import it on their behalf.

All state power generation companies and independent power producers have been asked to indicate their imported coal requirement for blending for the remainder of FY23 urgently to the coal ministry by May 31.