Utility to bear higher cost of imported coal; consumers in for a shock

The power purchase bills of the State are set to go through the roof yet again. The Union Cabinet Committee on Economic Affairs has approved a proposal to permit power generators to pass on the higher cost of imported coal to power buyers.

The approval will have a direct bearing on the State, as the Kerala State Electricity Board is, at present, spending about Rs. 770 crore a month for purchasing power.

The State is understood to have signed power purchase agreements with power stations at Simhadri in Andhra Pradesh, Vallur and Tuticorin in Tamil Nadu and Kudgi in Karnataka, among several. Some of these projects are yet to come up, and they will use imported coal for power generation. The Cabinet Committee’s decision will only benefit major power-sector players, and the consumers will have to bear the brunt.

Though the preliminary estimates had put the increase at 15-17 paise a unit, in all likelihood, the prices are to be decided on a case-to-case basis and hence will only be higher. The cut in allocation from the Central pool, a huge shortfall in generation and the problems in starting new projects have forced the State to bank heavily on power traders.

A proposal in 2009 was to pool the price of imported and domestically mined coal and fix the same rate for all generators, both private and the National Thermal Power Corporation. But that was given up following resistance from the corporation and the State governments.

Union Minister of State for Power Jyotiraditya Scindia has informed the State government that it is impossible to grant an additional share of power from the Central pool, and suggested approaching the Kerala State Electricity Regulatory Commission to find a solution to the financial crisis faced by the Board.

An acute energy crisis in Andhra Pradesh, Karnataka and Tamil Nadu was cited as a reason for turning down Kerala’s request. Between April and February, the State had an overall energy shortage of 4.1 per cent and a peak-time shortage of 8.8 per cent. During the period, the peak-time shortage in Andhra Pradesh, Karnataka and Tamil Nadu was 19.2 per cent, 13.5 per cent and 12.3 per cent, respectively. The Minister has clarified that it is impossible to override the difficulties being faced by other southern States to meet Kerala’s demand.

The State government’s plans to tap renewable energy sources have gone awry following the solar panel scam. The revised solar policy has not been published or notified. New power projects are moving at a snail’s pace.

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