The tariff orders to compensate for rise in the price of Indonesian coal provide relief to Tata Power and Mundra Power
CERC (Central Electricity Regulatory Commission) has notified the long awaited Compensatory Tariff orders on imported coal based Tata Power and Adani Mundra Power projects. The tariff orders have built a consensus among the stakeholders for providing relief to developers against a sharp rise in Indonesian coal prices (due to change in Indonesian regulations) through a mechanism of ‘Compensatory Tariff 1’, which is outside the purview of PPA (power purchase agreement).
‘Compensatory Tariff’ has been adjusted for
(a) net profit earned in mines;
(b) excess revenue earned by third party sale (if project achieves PAF>80%);
(c) 100 bps haircut on RoE (return on equity); and
(d) saving in fuel cost with lower GCV coal without sacrificing operational efficiency.
However, CARE Research believes that there is no meaningful impact of (b) and (d) conditions as plant has operated at 77% PAF YTDFY14 for Tata Power UMPP and usage of lower GCV coal decreases plant efficiency (SHR) and increases auxiliary consumption.
With this landmark judgement, CERC has managed to do a fine balancing act of preserving project viability for developers without disturbing sanctity of PPA and creating a mechanism for optimising DISCOM (distribution companies) power purchase costs, thereby reducing tariff shock to consumers, says CARE.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
