Following the notification of the CERC FY15-19 regulations relating to the power sector, the generation efficiency norms have been tightened
CERC (Central Electricity Regulatory Commission) has notified the final tariff regulations for FY15-19, which have lowered overall incentives (such as shifting from normative plant availability (PAF) to plant load factor (PLF) for earning incentives, reducing station heat rate (SHR) and auxiliary consumption) for central generation PSUs (public sector undertakings).
However, CERC has provided some relief to CPSU generators in terms of (a) PAF based recovery of fixed cost cut to 83% (v/s 85% earlier) and (b) complete pass-through of water charges and capital spares (v/s nil earlier), points out CARE Ratings in a research note.
On the other hand, the regulations reduce overall purchase price for DISCOMs due to (a) tax component on actual (v/s grossing up benefit earlier) and (b) payment of incentives on the basis of demand (rather than availability based payments earlier). Thus, this is estimated to bring in 9-10 paise/kWh relief to DISCOMs, which in-turn should be passed to consumers, says the research note.
CARE Ratings also says that the regulations are marginally negative for central transmission company i.e. Power Grid, where normative PAF levels increased to 98.5% (v/s 98% earlier).
According to the research note, the other key changes include: (a) Land acquisition is treated as ‘controllable’ factor- a big challenge for green field projects (b) Water charges are to be compensated separately (similar treatment as capital spares) in wake of substantial changes by most of the states (c) Special allowance at Rs0.75 million/MW for FY15 scalable @6.35%/annum. (d) 33%-54% hike in compensation allowance for eligible projects (e) Gains from truing-up of controllable factors to be shared between NTPC and beneficiaries at a ratio of 60:40 and (f) Refinancing of loans is termed as controllable factor and benefits are shared between CPSUs and beneficiaries in the ratio 1:2.
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