Higher cost of imported coal to be recovered through raising tariff only with CERC nod

The CERC,after legal examination of existing Acts and the model power-purchase agreement PPA,wrote on May 20 that for claiming high tariff,the project developer would have to move the appropriate commission and the decision of that commission in this regard would be final.

The appropriate commissions are expected to take decisions on the merits of each case including the claims of the project developers for compensation on account of imported coal after consultation with the stakeholders, it said.

Existing PPAs do not allow producers to pass through the high fuel costs as higher tariff to the electricity buyer. This makes running power plants on expensive imported fuels financially unviable and leads to low plant capacity utilisation.

The new mechanism,to be implemented on power plants commissioned since April 2009 but before March 2015,address coal supplies to 78,000 MW capacity. Coal India would commit only 80 per cent of fuel supplies of which 65 per cent would be initially from domestic mines while the rest would be imported.

On its part,the government would issue appropriate advisory to the CERC and the state electricity regulatory commissions,based on which,they would decide the pass through on a case-to-case basis based on the pleadings of the parties and the provisions of the PPAs,the note said.