GST & coal cess changes to lower power tariffs: CERC

New Delhi: The Central Electricity Regulatory Commission (CERC) has said that the statutory changes in the Goods and Services Tax (GST) and the coal compensation cess fall under the ambit of a 'change in law' event, and their impact will be adjusted or refunded to distribution companies.

The government had removed the ₹400/tonne compensation cess on coal and revised the GST rate from 5% to 18%.

The cost impact of these changes varies by coal grade. According to the government, coal grades G6 to G17 will see reductions ranging from ₹13.40 to ₹329.61 per tonne.


For the power sector, the average reduction is about ₹260 per tonne, translating into a cut of 17-18 paise per unit in the cost of generation, the coal ministry said on September 22.

"The move is very progressive being prompt action by a regulator which will help in ensuring cost reflective tariff adjustment on real-time basis" said Amit Kapur, Partner with law firm JSA.