Did the Andhra Pradesh Government act under pressure from the Union Power Ministry and asked its two discoms to enter into Power Purchase Agreement (PPA) with National Thermal Power Corporation (NTPC) hurriedly for supply of solar power at “inflated” price of Rs. 6.16 per kwh from its proposed 250 MW project in Anantapur district?
It appears so going by the argument put forward by those fighting in favour of consumers before the AP Electricity Regulatory Commission (APERC) during its sitting on Saturday. They argued that if the Discoms had a choice of going in for competitive bidding, the price would have been much lower benefiting the consumer. In fact, conceding the vociferous demand made by the consumers, the APERC agreed to hold a public hearing on November 7, to discuss the whole issue of PPA between NTPC and the two discoms—AP Southern Power Distribution Company Limited (APSPDCL) and AP Eastern Power Distribution Company Limited (APEPDCL).
They argued that the State government for some “inexplicable” reason gave in to the “dictates” of the Centre and NTPC to “force” the discoms to enter into PPA by agreeing to a tariff which was “manipulated, one-sided, and irrational”, contrary to its solar power policy, provisions of the Electricity Act of 2003 and national policy of 2006. Calling the PPA questionable, they wanted the APERC to scrutinise the files thoroughly and also give them the opportunity to examine them to see who had taken what stand while arriving at the price.
In his written submission on behalf of the consumers, power sector experts M. Venugopala Rao, said the NTPC had come up with a strange argument to justify its claim of Rs. 6.16 per kwh. In its affidavit, the company argued that under rule 8 of the Electricity Rules issued under Electricity Act of 2003, the tariff determined by the Central Electricity Regulatory Commission (CERC) should not be subject to re-determination by the State Commission (read APERC). The NTPC further contended that the price mutually agreed was consistent with and lower than the CERC’s order of March 31, 2015 that had fixed “levelised” tariff of Rs. 7.04 per kwh with benefit of accelerated depreciation (AD) of 0.69 paise per kwh, leaving no scope for discoms to appeal to APERC to regulate the price.
Calling the NTPC’s argument “irrational, pro-developer and anti-consumer”, Mr. Rao said it does not reflect the spirit of the Electricity Act and the national policy both of which favoured encouraging competition among power projects, irrespective of public or private sector, to generate and supply quality power at competitive rates to the consumers.
In determining the price, the CERC had given a go by to what the national tariff policy of 2006 has mandated emphasising on competitive bidding, he said. He cited the example of the APERC giving nod to 27 PPAs struck between the two discoms and the private developers selected through the process of competitive bidding for supply of solar power with a total installed capacity of 619 MW. The lowest price quoted in those biddings was Rs.5.25 per kwh. And the private developers had agreed to bear the additional expenditure now being borne by the AP Government in the case of NTPC.
If the Discoms had gone in for competitive bidding for purchasing solar power offering the facilities as they and the AP Government did in the case of NTPC’s project, they would have got much lower price—as low as Rs. 2.74 per kwh, if the lowest price of Rs. 5.25 was considered as the yardstick. NTPC, being the largest utility on the power sector, should have offered similar competitive price as it had the added advantage of economy of scale with its installed capacity of 1,000 MW to be enhanced to 2,000 MW when compared to smaller installed capacities of the private developers.
