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MOSL: UTILITIES-Public hearing of CERC tariff regulations FY19-24; Industry representation on draft tariff norms

Utilities: Public hearing of CERC tariff regulations FY19-24; Industry representation on draft tariff norms

 

We attended the public hearing of the draft tariff regulations for FY19-24, organized by the Central Electricity Regulatory Commission (CERC). Various industry participants, including DISCOMs, public and private sector generators, grid operator and consumer groups participated in the hearing. Key highlights of the representations made:

 NTPC

• Reducing regulated equity of plants after their useful life (Modified GFA approach): These plants have a low fixed cost and are running efficiently as they are well maintained. The modified GFA approach will impact maintenance of these plants, increase the risk of even a small variation in operating norms and will leave little incentive to keep the plants running. ~13GW of capacity is more than 25 years old.
• RoE on FGD should be allowed for existing plants, instead of just debt returns. Moreover, there is inconsistency as RoE on FGD cost is allowed for new constructions.
• Station heat rate (SHR) allowance for 200MW unit size is lower than the actuals of these units. The norms should be relaxed.
• Peak and off-peak recovery of fixed charges: There is no issue with the mechanism. Quarterly settlement of fixed charges, instead of an annual settlement earlier, is also fine.
• O&M allowance: It does not factor in the recent increase in cost due to GST and wage revision. Moreover, annual inflation allowance of ~3% should be increased to at least ~5%.
• Relax availability norms for new plants: New plants (like Mauda I & II, Solapur, Vindyanchal-V) are unable to achieve the normative availability of 83-85% due to initial stabilization and machine issues. The norms should be relaxed for new plants.