Tariff tussle grows over pricing of 970 MW project

The Solar Energy Corporation of India (SECI) and Karnataka Electricity Regulatory Commission (KERC) have locked horns over the power pricing of a 970 MW solar project.

November 12, 2018 Preeti Verma Lal

While KERC is an autonomous body, the state government can, under Section 109 of the Electricity Act, direct it to accept the tariff.

Image: Wikipedia/Muhammad Mahdi Karim

SECI is seeking a tariff of Rs 4.50 (US$0.062) per unit, while KERC wants to set it at Rs 4.36 ($0.060) per unit. The state regulatory body has refused approval to state discoms for the purchase of power above Rs 4.36 per unit.

In response to SECI’s appeal to the Appellate Tribunal for Electricity (Aptel), the tribunal has stayed the matter pending a final decision and in the interim, directed the discoms to pay Rs 4.50 per unit as SECI requested.

SECI’s auction in 2016 for the 970 MW project in Karnataka fetched a tariff of Rs 4.43 ($0.061) per unit. After completion of the project, SECI sought to sign power sales agreements (PSAs) with four of Karnataka’s discoms at Rs 4.50 per unit.

However, KERC’s secretary did not approve the tariff. He harked back to a May 2017 order in which the feed in tariff was set at Rs 4.36 per unit. “On the basis of the approved parameters … the commission hereby determines the tariff of Rs 4.36 per unit for all new grid connected MW scale solar PV plants,” it stated.

It may be noted that though KERC is an autonomous body, the state government can, under Section 109 of the Electricity Act, direct it to accept the tariff. However, the state government has not yet taken a stand on the issue.

This is not the first time KERC and discoms have been at odds over a tariff. Earlier, KERC prohibited discoms from paying more than Rs 3 ($0.041) per unit for thermal power from the National Thermal Power Corporation (NTPC), and Rs 3.71 ($0.051) per unit for bundled power (thermal and renewable power together).

When NTPC refused to heed to the tariff diktat, the Karnataka state government asserted itself on NTPC’s behalf.

In another development, SECI has raised the ceiling tariff of the 1,200 MW hybrid project from Rs 2.60 ($0.036) per unit to Rs 2.70 ($0.037). Recently, the Solar Power Developers Association (SPDA) had requested the removal of Rs 2.60 tariff cap which had led to several postponements of India’s largest solar-wind hybrid auction.

SECI has also raised the rate for its 10 GW auction to Rs 2.85 ($0.039) – a nominal increase from the earlier maximum tariff of Rs 2.75 ($0.038) per unit.

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