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Tariffs under discussion

A task force appointed by the government of India is said to be considering a differential tariff structure for the sale of hydro power. The task force follows publication this year of a new hydro power policy for India (see p17).

The task force consists of officials from the various state electricity boards, the federal electricity board and the Ministry of Power. It is examining the possibility of installing a hydro tariff which would operate on a regional basis. Within a region, the peak hydro power would be priced at the prevailing highest thermal/gas tariff. The base hydro tariff would be pegged at the lowest tariff in the region. The move to providing a dedicated hydro tariff is aimed at using hydro power for peak generation, given India’s high peak-load shortages.

A differential tariff structure for hydro projects is one of the key components of the new hydro power policy. Currently, hydro stations operate on a single tariff structure, based on a two-part tariff notification. The first part covers interest on loan capital and depeciation. The second part covers return on equity (at 16%), operation and maintenance charges, tax on income and other variable charges.

Meanwhile, in Pakistan, Minister for Water and Power Gohar Ayub Khan has constituted a special committee to discuss tariff reduction with independent power producers.

IPP operators in Pakistan —mainly operating thermal power plants — have been under pressure for some tme to reduce the cost of their electricity to the Water and Power Development Authority (WAPDA), despite signing long term power purchse agreements.

At a press conference at the end of October the minister said tariffs were high, and the resulting row was harming the country’s interests. The committee would have representatives from the private sector, and would compete its work within 30 days, he said.