CERC to compensate imported coal-based power producers

Energy regulator Central Electricity Regulatory Commission (CERC) has decided to fully compensate the power producers who run imported coal-fired power plants for higher operating costs required to provide electricity under forced conditions. The CERC order will be a relief to imported coal-fired power plants that were operating at full capacity to meet demand under the direction of the Department of Energy.

The CERC said in an order dated January 3, 2023: “To ensure that the petitioner maintains and operates its plant to generate power for supply to the procurers in accordance with MoP (Department of Energy) directions under section 11 ( 1) of the Act, Article 11(2) of the Act obliges the Commission to pay the petitioner compensation to cover costs plus a reasonable profit margin." The order was passed by the CERC on the basis of a petition submitted by Tata Power Company.

The MoP, in its letter dated May 5, 2022, has issued instructions under Section 11 of the Electricity Act requesting the imported coal-fired power plants to operate and generate power at full capacity.

The plants must initially supply power to customers under respective PPAs (power purchase agreements), and any excess power can be sold on power exchanges, the ministry had indicated.

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

On the CERC order, the company said in a statement that Tata Power welcomes the CERC's decision to allow the imported coal-based power plant full reimbursement of coal costs and operating parameters for providing electricity under emergency operation under Section 11." The order is also beneficial to the CGPL (Coastal Gujarat Power) Mundra plant as it can now recoup the full cost incurred in supplying power in terms of the MoP Section 11 directions.We are grateful to the CERC for granting all prayers in our favor," Tata said Macht.