Tata, Adani power tariff hike order challenged.

NEW DELHI: The Central Electricity Regulatory Commission's (CERC's) order allowing Tata Power and Adani Power higher tariffs to compensate for increased cost of coal imports has been challenged in the Appellate Tribunal for Electricity (APTEL).

In a petition before the highest appellate body in the power sector, Energy Watchdog, an NGO, has said norms do not allow review of tariff outside the timeline defined in power purchase agreements (PPAs). The petition also said the CERC's order was not in accordance with the law and the grounds of 'force majeure (an act of god or nature)' and 'change in law' given for raising tariffs were not applicable to the two companies.

The CERC had in February allowed the companies to charge a higher tariff for power supplied to five states from their plants, totalling over 8,000Mw capacity, in Gujarat's Mundra district.

The regulator also asked the states - Gujarat, Maharashtra, Rajasthan, Haryana and Punjab - to compensate past costs accruing from increase in the price of imported coal, totalling a compensation of Rs 1,100 crore to the two projects. The companies had sought the tariff revision claiming losses on account of rise in the price of coal imported from Indonesia, which was not foreseen in the agreements with the consumer states.

Energy Watchdog has said the Section 63 of the PPAs specify only two conditions that allow an out-of-turn tariff revision. Articles 12 and 13 of this section unambiguously define situations that can be considered as 'force majeure' or 'change of law'. The regulator had previously held unanimously that if neither of the conditions as mentioned under Articles 12 and 13 is fulfilled, it cannot invoke the power to raise tariffs.

The petition has also alleged that the tariff hike, with or without the agreement of parties to the PPAs, is contrary to Section 63 of the Electricity Act of 2003 and beyond the powers of CERC. The Section bars CERC to determine tariff when it has been determined through transparent process of bidding in accordance with the guidelines issued by the Central government.

The petition alleged CERC allowed undue favours to Tata Power by granting extra tariff, payable from a retrospective date (2012) and from (2011) for Adani Power, over and above the tariff quoted by them in an open tender. On the basis of the proposed hike, the extra burden on the exchequers would be Rs 44,000 crore and Rs 31,808 crore, respectively, the petition said.

Source : timesofindia.indiatimes.com