CERC compensates coal-based power producers for higher running cost

Power regulator Central Electricity Regulatory Commission (CERC) has decided to fully compensate the power producers running imported coal-based plants for higher running costs required for supplying electricity under forced circumstances.

The CERC order will come as a relief for imported coal-based power plants which ran to full capacity under the directions of the Ministry of Power for meeting demand.

The CERC in an order on January 3, 2023, said, "In order to ensure that the Petitioner maintains and operate its plant to generate power for supply to the Procurers in compliance with the directions of the MoP (Ministry of Power) under Section 11(1) of the Act, the Commission under Section 11(2) of the Act is required to compensate the Petitioner to cover the cost plus a reasonable margin of profit."

The order was passed by the CERC on a petition filed by Tata Power Company Ltd.

The MoP in its letter on May 5, 2022 issued directions under Section 11 of the Electricity Act asking the imported coal-based power plants to operate and generate power to their full capacity.

The plants are required to supply power in the first instance to the procurers under the respective PPAs (power purchase agreements), and any surplus power can be sold in Power Exchanges, the ministry had directed.

In cases where the power plants have PPA with multiple distribution companies, and if one distribution company does not schedule any quantity of power according to its PPA, that power will be offered to other beneficiaries and remaining quantity will be sold through Power Exchanges, the ministry had directed.

About the CERC order, the company said in a statement that Tata Power welcomes the decision of the CERC of allowing the Imported coal-based Power Plant full compensation of coal cost and operating parameters for supplying electricity under emergency supply under section 11.

"The order is also beneficial for the CGPL (Coastal Gujarat Power Ltd) Mundra Plant as it can now recover the full cost incurred for supplying power in terms of the MoP Section 11 directions. We are thankful to the CERC for granting all prayers in our favour," Tata Power said.