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Big tariff relief for imported coal-fired power plants

NEW DELHI: The Central power tariff regulator has ordered full payment of higher fuel costs along with “reasonable margin of profit” to imported coal-fired generation units that were forced by the government in May last year to avoid widespread blackouts amid a surge in demand.
The order, issued by the Central Electricity Regulatory Commission on Tuesday in response to a petition by Tata Power, comes as a relief for about 17 gigawatt imported coal-based capacity. Most of these plants are operated by private power producers, including Tata Power and Adani Power.
The power ministry had on May 5, 2022 invoked emergency powers under Section 11 of the Electricity Act to order these plants to resume operations at full capacity as domestic coal-based units were unable to cope with a spike in demand due to low fuel stocks.
Most of these imported coal-based plants had been switched off after their consumers refused to pay higher tariffs after international coal prices shot up.
According to the ministry directive, the plants were to give priority to consumers under respective PPAs (power purchase agreements) and only surplus power was to be sold on the exchanges.
While the operators switched on their plants under the government’s directive, the tariff was inadequate to cover the increased costs.
In cases of a plant having PPAs with multiple distribution companies, if one procurer chose not to buy any power, that surplus was to be offered to other PPA holders and remaining quantity offered on the exchanges.



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