The Hindu : `States not consulted on power tariff draft'

Online edition of India's National Newspaper
Wednesday, Sep 10, 2003

Southern States

Southern States - Tamil Nadu

`States not consulted on power tariff draft'

By T. Ramakrishnan

CHENNAI SEPT. 9. Tamil Nadu and other southern States have expressed their opposition to the Centre over the methodology of preparation of the discussion paper on the national power tariff policy as also some aspects of the document.

The chairpersons of the government-run power utilities in the southern region and those of the State electricity regulatory commissions had an occasion to convey their reservations at a meeting with the Union Power Secretary in Bangalore last week, sources said.

The States had a fundamental objection to the discussion paper. "It should have been prepared in consultation with the States, as per Section 3 of the Electricity Act 2003. "But, we were not taken into account at all", an official said. The States were asked to give their comments on the discussion paper after it had been prepared.

Secondly, the document should have given a broad outline of how the tariff should be fixed. "Instead, it deals in detail with every aspect, leaving virtually no work to regulatory bodies", the official said.

Citing an instance, he said that as per the discussion paper, for providing incentives to thermal stations, plant load factor levels had been fixed in excess of 80 per cent. "It is not for the Centre to mention such details in the proposed policy. It should have been left to the regulators".

In fact, Tamil Nadu was for fixing a higher benchmark so that utilities such as the Electricity Board would have to pay less to power producers. The State suggested 85 per cent as the PLF. "If the Electricity Boards are taxed more, they will only try to pass on the burden to end-consumers", the official said.

Last month, the Andhra Pradesh Chief Minister, N. Chandrababu Naidu, expressed similar views in a letter to the Union Power Minister, Anant Geete. He demanded that a proper consultative mechanism, comprising the States and experts, be put in place for formulating the policy. The Central Electricity Regulatory Commission also went on record that it had not been involved in the preparation process, contrary to the statutory provisions.

The Power Secretary told the representatives of the southern States at last week's meeting that he would convene a separate meeting on this subject. Moreover, the discussion paper was only a draft of the policy document, the sources said.

According to the discussion paper, as the power sector requires a significant quantum of resources to meet the requirements, its ability to attract commercial capital needs to be ensured through relevant policy and regulatory action. It is in this context that the proposed tariff policy seeks to strike a balance between the interests of consumers and providers of capital.

Meanwhile, the Union Government has sought comments on the terms of reference laid down for a five-member task force on power sector investment and reforms.

The committee, headed by the Union Planning Commission member, N.K. Singh, has been entrusted with recommending the tariff policy and evolving and suggesting the national electricity policy. Other terms include suggesting a roadmap for the effective functioning of the State electricity utilities and measures for speedy implementation of schemes such as the Accelerated Power Development and Reform Programme.

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