Friday, June 24, 2022

Power crisis: CERC proposes ‘deterrent charges’ for power plants with low coal stock

The CERC has proposed “deterrent charges” in the form of a reduction in power tariffs for plants that do not maintain adequate coal stock

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  • In its proposal, the CERC has argued that in order to recover full annual fixed charges, it is the obligation of the power generating company to arrange sufficient coal stock
  • The CERC has also proposed the two methodologies for the calculation of deterrent charges

New Delhi: The Central Electricity Regulatory Commission (CERC) has proposed “deterrent charges” in the form of a reduction in tariffs for power produced by thermal power plants that do not maintain adequate coal stock, a staff paper floated by the regulator body shows. “During the recent months, coal stock at many coal-based thermal generating stations were reported as lower than the coal stocking norms specified by the Central Electricity Authority (CEA). Such low coal stock led to lower declared availability by the generating stations, which in turn forced states to purchase power from alternate sources at higher rates,” said the CERC.

“Thus, failure to maintain coal stock as per norms impacts the availability of the plant and the power supply to the beneficiaries, thereby forcing the concerned to procure power from alternate sources, which are often costlier. The failure of the generating stations to maintain coal stock as per norms, thus gets transferred to the consumers in the form of higher cost of procurement of power from alternate sources,” said the CERC.

Power plants obliged to maintain sufficient coal stock

In its proposal, the CERC has argued that in order to recover full annual fixed charges, it is the obligation of the power generating company to arrange sufficient coal stock for its generating stations as per norms and maintain the availability of the plant as per the relevant regulations.

“Therefore, it is proposed that if coal based generating stations fail to maintain coal stock as per the revised coal stocking norms as specified by the CEA, the AFC of such generating stations is reduced,” the CERC has said in the staff paper. The paper has also proposed the two methodologies for the calculation of deterrent charges, one for power stations based on domestic coal and another for those based on imported coal.

CERC’s existing tariff regulations provide for a reduction in Annual Fixed Cost (AFC) if plant availability is lower than the normative requirement of 85 percent. In its proposal, the regulatory body has proposed to increase the AFC if coal stocks are lower than the normative requirement mandated by the CEA.

CEA had revised stocking requirements for plants

In December 2021, the CEA had revised the coal stocking norms for power plants after a sudden spurt in electricity demand precipitated a power crisis and coal shortage. As per the revised coal stocking norms, coal-based pit-head thermal power plants are required to maintain coal stock in the range of 12 days to 17 days, depending on the month of the year, as against prevailing coal stock norm of 15 days. Power plants situated away from the mines, ie non-pit head plants, are required to maintain coal stock in the range of 20 days to 26 days compared to the prevailing coal stock norms of 20 days to 30 days.

The recent proposal from CERC comes in the backdrop of a similar power crisis, as India witnesses a spurt in power demand followed by fast depletion of coal stocks at power plants.

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