Regulator cuts fixed cost of Goindwal Sahib project, PSPCL to pay 33% less
Power utility will now pay ₹1.5 per unit against ₹2.2 it has been paying since 2016-17; to get a refund of ₹450 cr, as capital cost slashed from ₹4,442 cr to ₹3,059 cr
THE FIXED COST OF
ELECTRICITY IS DETERMINED ON THE BASIS OF THE CAPITAL EXPENDITURE THAT THE PRIVATE FIRM INCURS IN BUILDING THE PLANT
PATIALA: Amid a raging political row over the hike in power tariff in the state, there is some relief in store for Punjab State Power Corporation Limited (PSPCL).
The Punjab State Electricity Regulatory Commission (PSERC) has decreased the fixed cost of electricity that GVK Goindwal Power Project produces from ₹2.2 to ₹1.5 per unit.
The order results into PSPCL, that buys from GVK Power Limited, saving ₹200 crore a year. The power utility will also get a refund of ₹450 crore, as it had been paying fixed cost at the rate of ₹2.2 per unit since 2016-17.
The fixed cost of electricity is determined on the basis of the capital expenditure that the private firm incurs in building the thermal plant.
HISTORY OF THE DISPUTE
In 2017, GVK had filed a petition before the PSERC for the determination of tariff, claiming that the capital cost of the project as ₹4,442 crore.
In February 2018, on submissions made by GVK for grant of provisional tariff based on 95% of this projected capital cost, the PSERC allowed provisional tariff with capacity charges (fixed charges) as ₹2.2 per KWh in place of ₹1.926. The energy charges (variable charges) were paid on the landing cost of coal, subject to the maximum cost from the Pacchwara mine to the PSPCL.
However, the power utility objected to it and asked for evaluation of capacity charges through an independent auditor, who calculated it at ₹4,103 crore.
Even this figure was objected to by PSPCL and this time, the PSERC allowed it to calculate the project cost by appointing its own team of officials, but under the regulator’s supervision.
This team calculated the capital expenditure at ₹2,812 crore. Now, after hearing objections to this, the PSERC has allowed ₹3,059 crore as the capital cost of the GVK project.
In the order, the PSERC states that the capital cost that the GVK had claimed was more than what it had actually incurred, and, thus, the regulator revised the provisional fixed capacity charges from ₹2.2 to ₹1.926 per kWh.
On PSPCL’s objections again, this was reduced to ₹1.5 per unit.
“It is a major relief for PSPCL. The annual charges for GVK project will come down by 33%. PSPCL will now get ₹450 core from 2016-17 to date. Now, the PSPCL has to pay ₹600 crore as annual fixed charges, instead of ₹810 crore,” a PSPCL official said.