State-owned Maharashtra State Power Generation Company (Mahagenco) has said it has managed to reduce its electricity generation cost by around 9.32 per cent this month by adopting merit order dispatch (MOD) method to source coal.
This will result in a reduction in the cost of power for consumers by around 20-22 paise per unit, the state power generator said in a statement.
To reduce the cost of electricity generation in the country and, thereby, reduce the cost of power for consumers, the Centre had approved the merit order dispatch mechanism in 2016.
Under the mechanism, the government eased the geographical restrictions in coal provisioning and allowed flexibility in utilisation of domestic coal among state and central power producers to reduce unnecessary transportation of coal and involved costs of the same.
"Due to the decline in power demand during the lockdown period, we had to shut down a few of our total 28 coal-based power units in the state. As of June 30, only 10-12 units were operational, while 3,460 MW (megawatt) capacity was shut.
If we now have to restart the power plants, we will have to reduce the cost of generation and, therefore, we adopted the merit order dispatch mechanism to source cheaper yet good-quality coal from nearby sources," the state generator said in a statement.
According to Mahagenco, nearly 70 per cent of its coal requirement is sourced from Western Coalfields Ltd.
"However, with the implementation of MOD, we have managed to bring down our power generation cost by almost 9.32 per cent in July. As a result, we will be able to restart a few more units to have nearly 20-22 units of around 6,000 MW operationalised," it said.
State power utility Maharashtra State Electricity Distribution Company (Mahadiscom) has tied up with Mahagenco for supplying power to its over three crore consumers across the state.
The discom came under criticism for charging inflated bills to consumers in June.
On Monday, consumers along with power activist Pratap Hogade and local political leaders protested against inflated bills in various parts of the state seeking exemption from paying bills of the last three months for customers consuming less than 300 units.
The Maharashtra Electricity Regulatory Commission had backed the state utility stating that the bills generated during June would be inflated as the utility could not complete the meter reading for March, April and May due to the coronavirus-induced lockdown.