CERC suggests changes to power tariff determination methods

NEW DELHI: The Central Electricity Regulatory Commission has suggested changes to power tariff determination methods, including the introduction of region-wise rates and incentives for generators during fuel shortages.

The regulator's suggestions come in the wake of an acute fuel scarcity in the country, which is hurting electricity generation and increasing dependence on imported coal.

The CERC is seeking comments from stakeholders on its suggestions made in an approach paper on 'Terms and Conditions of Tariff Regulations' for the five-year period starting April 1, 2014.

The issues raised in the paper include the need to review provisions dealing with fuel shortages and if incentives should be payable in such situations or full recovery of fixed charges should be ensured.

In the matter of increasing electricity prices due to the use of imported fuel, views have been sought on whether it is "necessary and practical to take prior consent of beneficiaries for blending the imported coal with domestic coal."

The regulator has also asked for comments on how to deal with scheduling and incentive aspects if the beneficiaries are not ready for blending of imported coal.

Some power producers that operate plants using imported fuel have faced difficulties in passing on increased costs as their customers were unwilling to pay higher prices for electricity.

The CERC said the existing approach of setting tariffs based on projected capital expenditure and anticipated commissioning of projects result in frequent revisions.

"It is being contemplated that too many revisions will cause regulatory burden on stakeholders," according to the paper.

To simplify the working of tariff determination, the regulator has said the issues need to be addressed by "introducing tariff determination based on region-wise tariff instead of individual project/element wise tariff."

"In case of region-wise tariff determination, the transmission licensee may require to separate out region-wise assets with corresponding capitalised expenditure and financing information," it added.