Fuel risks should not be fully passed on to consumers: CERC
Amid acute coal shortages hurting power generation, sectoral regulator CERC has said that fuel risk should not be "entirely" passed on to consumers.
New Delhi: Amid acute coal shortages hurting power generation, sectoral regulator CERC has said that fuel risk should not be "entirely" passed on to consumers.
The regulator's suggestion to the Power Ministry comes at a time when there are concerns that expensive coal could push the electricity tariffs higher.
"We are of the view that the fuel risk should not be passed on to the consumers entirely," the Central Electricity Regulatory Authority (CERC) said in its comments on the draft model power purchase agreement for public private partnership in electricity generation.
The model PPA, proposed by the Power Ministry, has raised concerns among sectoral players who feel that many of the proposed clauses could adversely impact the sector.
The CERC has said that the Power Ministry should engage with the Coal Ministry to ensure 100 percent supply of coal for power plants.
"In the event of Coal India not being able to supply from its mines, it (Coal India) should import, blend and supply coal to the generator. The cost of blended coal procured by Coal India may be allowed as a pass through," the CERC has said.
Official estimates show that nearly 65,000 MW of power generation capacity is adversely impacted by coal shortages.
The draft PPA has suggested that costs related to availability of fuel for power plants should be shared between the beneficiary and the generator in the ratio of 70:30.
As per CERC, such a proposal where both the bidder and the procurer would be subjected to risks, could lead to "assets getting stranded".
According to the regulator, the concept of deemed availability and minimum fuel stock for ten days should be done away with.
India is expected to see a capacity addition of more than 80,000 MW in the current Five Year Plan (2012-17).