CERC norms hold grave portent for State

The new regulations notified by the Central Electricity Regulatory Commission (CERC) for interstate power transmission charges payable by the States can have serious financial implications for Kerala, officials of the Kerala State Electricity Board (KSEB) have said.

Under the CERC (Sharing of Interstate Transmission System Charges and Losses) Regulations, 2020 — to be effective from November 1 — the charges payable by the State is likely to shoot up to around ₹1,500 crore per year. At present, it comes to approximately ₹550 crore.

Ultimately, this additional financial burden will reflect in the power tariffs since the burden will be passed on to consumers. It is estimated that the tariff can go up by 50 paise per unit, says an official.

In the meantime, the KSEB is planning to challenge the regulations in the High Court. “We have already informed the CERC and the Union Power Ministry of the State’s apprehensions regarding the proposed regulations,” KSEB Chairman and Managing Director N.S. Pillai said.

States such as Tamil Nadu, Odisha, and West Bengal also are likely to experience a hike in transmission charges, while it will significantly dip for several other States.

The reason is that the new regulations seek to change the manner in which the charges for underutilised interstate transmission lines are calculated. “Many interstate lines constructed in recent years by Power Grid Corporation Ltd (PGCIL) remain underutilised. The utilisation of many high-capacity transmission lines is below 30%. At present, the entire charges for these lines are borne by States through which these lines pass through, as they are the ones who use them,” says another official.

Originally constructed to enable export of power by large private sector power generation projects, the lines were later relinquished by the companies when they were unable to find buyers for their power or the projects themselves were not completed on time.

About 34,000 MW of transmission capacity has so far been relinquished by private generating companies out of the 83,000 MW allocated by the PGCIL, according to the officials.

“The CERC issued the new regulations after those States currently burdened by the underutilised lines lodged complaints. However, instead of taking steps to realise the relinquishment charges from the private power generation companies, the CERC is shifting the burden from existing user States to States such as Kerala,” they say.

The new regulations also contradict the tariff policy which require transmission charges to be calculated on the basis of usage. Under the new regulations, however, the charges are segregated into ‘usage’ and ‘balance’ components. The usage component comes to only 22% of total charges. The balance component of 78% is distributed among the States irrespective of whether they are using the lines or not, they say.

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Printable version | Dec 5, 2020 6:03:09 AM |

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