The central government has set up a committee consisting of the officials of states and power ministry to look into restructuring tariff to reduce burden on industrial units by making large domestic and commercial consumers of electricity pay more [most states categorize households consuming more than 800 units of power a month as large domestic consumers]. The committee will work on classifying consumers in two to three categories and sub-categories to bring transparency in power billing. It will also study the possibility of increasing fixed charges on connected load of domestic consumers to encourage them to surrender un-utilized load. What has triggered thinking along these lines? At the outset, it is important to know as to why industrial consumers are...
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Category: Independent power producers (IPPs)
Electricity reforms – ‘open access’ stymied by populism
An over-arching component of prime minister Modi’s good governance mantra is effective implementation of the laws and policies & programs of the government. He has amply demonstrated this in several areas viz., DBT [direct benefit transfer] of LPG subsidy, Jan Dhan Yojna [JDY], MGNREGA etc with substantially positive outcomes. However, electricity reforms is one area where proper execution is hamstrung primarily due to non-cooperation from states. At the core of reforms initiated by present dispensation in the power sector is improvement in the functioning of state electricity boards [SEBs], greater regulatory oversight over SEBs and power generators besides creating conditions for enhanced competition in the sector so that consumers get the benefit in terms of lower tariff and better quality...
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UDAY – no panacea for SEBs woes
One of the major accomplishments of Modi – government during its two years stint has been in alleviating the constraints facing power generation companies/entities. It has done so by increasing production of coal by Coal India Limited [CIL] and filling all voids in the evacuation, transportation and distribution infrastructure to reach supplies to generating stations. It has also helped gas based power plants by arranging supplies of gas at lower rates enabled by pooling of imported LNG [liquefied natural gas] with cheaper domestic gas. The cost of LNG itself has been brought down drastically by re-working an existing long-term 25 year contract with RasGas [Qatar] to align the formula with its low current international price [courtesy, low crude price]. It...
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It’s all just power play
Electricity boards and consumers are being systematically short-circuited by the robbing-Peter-to-pay-Paul policy Tata Power Ltd bagged a 4000 MW ultra mega power project based on imported coal in Mundra, Gujarat, under tariff-based competitive bidding to supply power at fixed tariff of Rs. 2.26 per unit all through the project’s operational life. Likewise, Adani Power (APL) bagged a UMPP to supply to Gujarat and Haryana at Rs. 2.35/Rs. 2.94 a unit. In April 2013, the Central Electricity Regulatory Commission (CERC) allowed compensatory tariff(CT) of Rs. 0.524 per unit to TPL for all its buyers. APL was allowed CT at Rs. 0.851 per unit and Rs. 0.364 per unit for supplies to Gujarat and Haryana, respectively. The CT was meant to neutralise...
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Power conundrum – robbing Peter to pay Paul
In April, 2013, Central Electricity Regulatory Commission (CERC) in its interim order, allowed a ‘compensatory tariff’[CT] of Rs 0.524 per unit to Tata Power Ltd (TPL) 4000 MW ultra mega power project (UMPP) based on imported coal in Mundra, [Gujarat] for all its buyers. Likewise, for Adani Power, UMPP [4620 MW] it allowed CT of Rs 0.851 per unit and Rs 0.364 per unit for supplies to utilities in Gujarat and Haryana respectively. The CT was meant to neutralize increase in price of imported coal consequent to decision of Indonesian Government in September 2011, imposing a minimum ‘benchmark’ price below which coal cannot be exported. Not quite satisfied with the quantum of relief given by CERC, the Adani/Tata petitioned the...
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Modi must rein in power theft and freebies
On September 12, 2015, chief secretaries of states whose power distribution companies [PDCs] are making losses had a meeting with union power minister, Piyush Goyal. This was followed by a meeting of PDCs officials with prime minister on September 14. They were demanding support from central government in dealing with their accumulated losses of over Rs 300,000 crores. To be precise, they wanted these liabilities to be extinguished so that they start on a clean slate. Contrary to expectations, Team Modi has categorically rejected any bail out. This is a bold stance. Since 2002, PDCs got two bail out packages [Rs 40,000 crores in 2002 and around Rs 200,000 crores in 2013]. These were granted on the promise that they...
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State electricity boards – ‘Achilles heel’ of India’s power landscape
A major ingredient of Modi – government’s development agenda is un-interrupted supply of power 24×7 to industries, services, agriculture, households et al in required quantity at affordable price. It plans to reach this goal in less than a decade. Undoubtedly, it is making unstinted efforts in all vital areas viz., adding to the generation capacity [a big chunk in solar power to make our systems environmentally benign]; making arrangements for fuel supply especially coal and gas to run power plants at optimum load; augmenting and strengthening the transmission and distribution (T&D) infrastructure [by involving private sector through a competitive bidding process] and providing last mile connectivity through a well-spread out network of feeder lines etc. However, one area of concern...
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Gas-based power plants ‘woes’ – look for permanent solutions
True to its commitment to filling the cleavages in system left over by a decade of policy paralysis and mis-governance under erstwhile UPA dispensation, Modi – government has sewed up a package for resurrecting 24,000 megawatt (mw) of power generation capacity based on gas. For starters, 14,000 mw of capacity with an investment of Rs 60,000 crores is lying dormant (no generation at all) due to absence of fuel linkage. Another 10,000 mw with Rs 40,000 crores blocked is operating at sub-optimal level i.e. below 30% due grossly inadequate supply of domestic gas. The relevant plants were commissioned in anticipation of abundant supplies from prolific KG-D6 field off Andhra coast [this discovery was made in 2002 and initial development plan...
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DISBAND THE CULT OF FREELOADERS
To fix the crumbling power generation and distribution systems, the Modi regime has to crack down on the political class that promises free or cheap electricity. All other steps, such as amending the Electricity Act, are just cosmetic Inaugurating the first Renewable Energy Global Investors Meet & Expo (RE-Invest), Prime Minister Narendra Modi wondered how political parties could promise to supply electricity at reduced rates when their States are dependent on electricity supply from outside. The remark was targeted at the Aam Aadmi Party which, in its election manifesto, had promised to cut electricity bills by half, even as Delhi gets nearly 70 per cent of its power from other States. In 2015-2016, Delhi’s total power requirement is expected to...
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Stop cult of power freebies
Inaugurating the first Renewable Energy Global Investors Meet (RE-Invest), prime minister Modi castigated political parties for promising to supply power at reduced rates saying how could they make such promises when the concerned states are dependent on electricity supply from outside. The remark was targeted at Aam Aadmi Party (AAP) which in its election manifesto, had promised to cut electricity bills by half even as Delhi meets nearly 70% of its power requirements from other states. In 2015-16, its total requirement is expected to be over 6000 MW; so it will draw 4200 MW from other states. However, it would be imprudent to dismiss this as a political statement directed at AAP alone. Cutting across party lines, Modi was making...
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