NTPC-CERC tariff row intensifies

NTPC-CERC tariff row intensifies
PRESS TRUST OF INDIA

New Delhi, Jan 21: The row between National Thermal Power Corporation (NTPC) and Central Electricity Regulatory Commission (CERE) over the new tariff norms intensified today with the power PSU refuting the charge that it was not passing on the benefits of incentives to the state electricity boards.

While CERC chairman S L Rao accused NTPC of retaining all the benefits given to it under incentives schemes under the present dispensation, the power utility said that the two-part tariff mechanism was formulated to pass on major benefits to state electricity boards and consumers. When contacted NTPC chairman and managing director C P Jain told PTI “unlike the single price formula in fertiliser and petrochemical sectors, the two-part tariff for power utilities ensures passing on of entire savings on fixed charges to SEBs and consequently consumers.”

The Generators only get benefit of incentives given for improved performance over the benchmark level for fixed charges, Jain clarified when asked about the criticism that NTPC was not passing on the benefits of incentives to consumers. “Under the two-part tariff the entire generation is billed on fuel cost (variable cost) only. Generators get fixed changes as pre-determined amounts which increases or decreases by incentives or disincentives depending on level of generation,” he added.

CERC had earlier announced that new tariff, effective from April 1, 2001, would be based on 80 per cent power availability as against 68.5 per cent now, which prompted strong protest from NTPC on the ground that it would cause an annual cash flow loss of Rs 1700 crore.

Rao told PTI that new tariff norms provided for a high incentive rate of 21 paise for improved performance beyond 77 per cent plant load factor (PLF) while keeping the interests of SEBs in mind.

NTPC sources, however, said that there was a fallacy in the entire argument of CERC and the corporation would make it a point for an imminent appeal in the Delhi High Court against the tariff order passed on December 22.

They said that NTPC was getting only one paise percentage point improvement over the benchmark level of 68.5 per cent of deemed generation of electricity and the corporation was getting an average incentive of 21.5 paise for the overall performance of its various plants. “Under the new norms, CERC has set a benchmark of 77 per cent PLF which will reduce the incentives to an average of 18 paise going by last year’s performance,” they said.

Consequent upon the changes, the corporation would be deprived of incentive on 15 billion units of electricity which would mean a loss of Rs 325 crore, they said adding that loss of these units would now be subjected for punitive disincentive measures.

CERC norms provide for pro-rata disincentive on fixed charges at the rate of 100 per cent for performance below 77 per cent of PLF as against the prevailing punitive norms of discounting 50 per cent fixed charges for performance below 62.5 per cent.

NTPC officials said that stifling disincentive norms would cost the corporation an estimated Rs 350 crore on the level of performance during 1999-2000. Elaborating, they said that the incentives for various plants of the corporation ranged between 13 paise to 27 paise for an overall average of 21.5 paise.

However, many of the plants that were getting incentives for high performance under prevailing norms fixed by government since 1992 would be penalised under the proposed mechanism that too at double rate for discounting of fixed charges.

Sources said that corporation was engaged in intense legal consultation for taking appropriate steps to safeguard its financial interests and added that changed incentive and disincentive parameters would be among the major issues to be highlighted during the imminent court battle.

Power Minister Suresh Prabhu had earlier said that NTPC was free to move court as an affected party by the CERC order but emphasised that government would not interfere in the working of the regulator.