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New tariff design for big projects

Big projects in India, whether hydro or thermal, will have a new criterion for the generators’ tariff — the criterion being that the power generated by them is sold to more than one Indian state. The tariff, the idea of India’s Central Electricity Regulatory Commission (an autonomous regulator set-up in July 1998 to license and set tariffs for such utilities) will be the first exercise of this type by the Commission. It will pre-suppose a daily schedule of generation worked out between generators and distributors (mainly state electricity boards), based on plant availability rather than on the percentage capacity. The tariff consists of three charges:

•Fixed charge, comprising return on equity, interest, income tax, depreciation and operation and management costs.

•Energy charge, for power supplied daily as per the schedule worked out a day ahead.

•Unscheduled interchange charge, when there is a variation from the schedule.

New norms for incentive payments — to ensure plant availability above a certain minimum — have also been set. For example, the National Hydroelectric Power Corporation can claim such payments only above 85% of its capacity utilisation (instead of the previous 80%). While this tariff structure — meant for both federal utilities and IPP plants — is not applicable to power stations which supply energy to only one state, it is expected that the norms set in the central tariff would guide the state tariffs too.

The new central tariff is effective from 1 April 2000 for the power stations in the southern region of India, and will then be progressively implemented in other regions.