CERC allows Tata Power to raise power tariffs

In a significant ruling, the national electricity regulator on Monday allowed Tata Power to raise power tariffs to compensate for an unexpected increase in coal cost.

The Central Electricity Regulatory Commission (CERC) has asked states that buy electricity from Tata Power's 4,000 megawatt Mundra Plant in Gujarat to form an expert panel to decide on compensating the firm for higher cost of coal imports from Indonesia.

The ruling is similar to the regulator's April 2 order allowing Adani Power to charge more for electricity produced at its Mundra plant in Gujarat.

Indonesia's move to link its coal prices to international benchmark rates has led to cost increases for Indian power companies and rendered their contract tariffs unviable.

With domestic coal production lagging demand, utilities like Tata Power and Adani Power have little choice other than bringing in costlier coal that would mean higher electricity cost.

Coastal Gujarat Power Ltd, a wholly-owned subsidiary of Tata Power, had petitioned CERC seeking relief on account of adverse impact of the unforeseen, uncontrollable and unprecedented escalation in the imported coal price.

"In the present case, the escalation in price of imported coal on account of Indonesian Regulation is a temporary phenomenon and will be stabilised after some time...therefore, the petitioner needs to be compensated for the intervening period with a compensation package over and above the tariff discovered through the competitive bidding," CERC said in its order.

Four-members of CERC including its Chairperson Pramod Deo ruled in favour of Tata Power while one member, S Jayaraman, dissented.