Saturday, Sep 20, 2014

Attempt to lower tariffs set off Mumbai outage

BEST didn’t want expensive Tata power. BEST didn’t want expensive Tata power.
Mumbai | Posted: September 4, 2014 5:11 am

While the Maharashtra government’s inquiry into Tuesday’s massive outage in Mumbai will point to the choking of the transmission grid into the city as a major cause after Unit 5 at the Tata Trombay facility tripped, the attempt to protect customers from a tariff shock was a big reason for the blackout.

Anticipating more festival demand, the Maharashtra State Load Despatch Centre (MSLDC) had on August 26 asked Tata Power to start producing power from its 500 MW Unit 6 in Trombay that runs on oil. Had Unit 6 been functioning on Tuesday, even after Tata Power’s 500 MW Unit 5 had tripped, the city wouldn’t have had an outage.

But Tata Power did not commission Unit 6 as it was not clear who would pay for the extra cost — at current oil prices, a unit of electricity would cost R11-12 — and wrote to Brihanmumbai Electric Supply & Transport and Reliance Infrastructure, to which it supplied power.

On August 29, BEST wrote back to Tata Power saying it did not wish to bear the costs, indeed it wished “to amend the PPA for exclusion of Unit-6 being costly generation and till all the formalities are completed for taking Unit-6 out from the PPA, it is to be presumed that Unit-6 is excluded from the PPA”.

BEST said the methodology being proposed to share the costs of the more expensive Unit 6 had been agreed to in the past, but that was only to tide over the alarming power situation during the summer months.

BEST’s calculations, in all probability, were that if there was a power shortage — and it wasn’t to know Unit-5 would trip — this could easily be met through less costly imports. After all, there could be questions asked later as to why costly Unit 6 power had been bought at R11-12 per unit when this could just as easily have been imported at R3-4. The problem, however, is that Mumbai’s transmission system is too overloaded to take more imports.

In the event, on August 29, Tata Power wrote to MSLDC saying that it could not bring Unit 6 into operation until R-Infra and BEST agreed to share costs with it — it attached the BEST letter that said “we request you to give necessary instructions to your officers for not scheduling any power from Unit-6 to BEST (if it is operated for any reason) and you are also hereby informed not to raise any bills against power generated from Unit-6 as the same will not be paid by us”.

Tata Power then suggested a meeting be convened with the principal secretary (energy) chairing it and coming to a cost-sharing formula of the type agreed to just a few months ago when Unit 6 was last run.

That meeting, ironically, has been scheduled for later on Thursday.

While Thursday’s meeting will probably lay out a firm cost-sharing principle that all distribution companies continued…

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