Hydro Tariff Determination

TARIFF DETERMINATION METHODOLOGY FOR HYDRO POWER PLANT 1. Background The Electricity Act 2003 has empowered the Central Electricity Regulatory Commission (CERC) to specify the terms and conditions for the determination of tariff in respect of the generating companies that are either owned by the Central Government or supply power to more than one State. The CERC is also empowered to determine the tariff that can be levied by Transmission licensees for Inter-State transmission of electricity. Section 61 of the Act empowers the Commission to specify, by regulations, the terms and conditions for the determination of tariff in accordance with the provisions of the said section and the National Electricity Policy and Tariff Policy. After the enactment of the Electricity Act 2003, the CERC had come out with Tariff regulations for the period FY 2004-09 in March 2004. Post the expiry of earlier Regulations on March 31, 2009, the CERC had notified new tariff regulations on January 19, 2009 for the next control period FY 200914. The new regulations apply to all Generating stations (excluding stations based on nonconventional energy sources) and Transmission licensees, provided that the tariffs for these entities have not been determined through bidding process in accordance with the guidelines issued by the Central Government. The Tariff regulations notified by the CERC are also important for the various State Electricity Regulatory Commissions (SERCs) as they are guided by these regulations while framing their own tariff principles for the State sector utilities concerned.

2. Regulatory Norms for Computation of Tariff for Hydro Power Plant Power generation from Hydropower is highly capital-intensive but being renewable source of energy there are no consumables involved which thus results in little recurring cost with modest long term expenditure. The Power generated from Hydropower plant is relatively cheaper as compared to electricity generated from Coal and Gas fired...