Centre to ensure lower power tariff

With power-producing companies bagging coal blocks at cheaper rates after the government introduced reverse bidding in the ongoing auction, the Ministry of Power will soon write to states to reopen existing Power Purchase Agreement (PPA) between distribution firms and power producing companies to ensure consumers get electricity at lower tariff.

“To ensure that consumers get the benefit of low coal price, the Power Ministry will issue advisories to the state and central electricity regulatory commissions to revise the existing PPAs so that electricity users can enjoy low tariff,”an official in the Ministry told Deccan Herald.

The government is also amending the National Tariff Policy to allow the electricity regulatory commissions to reopen the PPAs according to changes in fuel cost, said the official.

The Section 63 of the Electricity Act, which relates to tariff­-based competitive bidding, limits the role of electricity regulators to adopting the tariff and not vetting.

As the government is studying different methods to pass on benefits of low coal cost to consumers, an official in the ministry said “once the National Tariff Policy amended, then the government can revise the tariffs downwards even in the existing PPAs.

Besides, the government is also planning to cap costs of power plants that can be passed on to electricity consumers, to prevent rise in tariffs.

According to the Ministry of Power, capping the fixed costs of the plants will prevent increase in tariff in new contracts between discoms and power producing firms. “This is mainly to prevent some of the power producers, which bagged coal blocks with high cost due to aggressive bidding, passing the burden on to consumers,” said the official.

The Ministry of Coal is likely to begin issuing ownership rights on March 23 for the coal blocks that have been auctioned so far, starting with successful bidders for 15 mines in the first tranche.

As many as 19 mines under Schedule II (already in production) category were auctioned in the first leg held between February 14 and February 22.