No relief for Tata Power, CERC refuses to allow termination of costly PPAs with NTPC, NHPC, THDC plants

The Central Electricity Regulatory Commission (CERC) has said it cannot allow Tata Power Delhi Distribution (TPDDL) to terminate some of its power purchase agreements (PPAs) due to high average power purchase cost of NTPC, NHPC and THDC plants. The quasi-judicial body said since TPDDL’s petitions have no relationship with tariff regulation, taking a decision on such a matter does not come under its purview. TPDDL, a joint venture between Tata Power and the Delhi government, had said it has surplus power to meet the projected demand in its distribution areas of north and north-west Delhi till FY20. Since it still has to pay for the unrequired excess power, about 14.2 lakh customers will end up paying higher tariff. Power procurement cost has more than 80% bearing on tariff to the consumer.

The CERC said reallocation of power from these stations to needy states would help in utilising these plants more efficiently. The company had approached utilities in Karnataka, Jammu and Kashmir, Uttar Pradesh, Uttarakhand, Punjab and Rajasthan seeking temporary reallocation of power. The CERC said allocation of power from central generating stations are decided by the Central government.

In 2015, the Delhi government had requested the Union power ministry to reallocate power from NTPC’s Badarpur, Auriya, Dadri, Anta, Jhajjar and Koldam; NHPC’s Dulhasti, Chamera-III, Parwati-III and THDC’s Tehri hydroelectric plants, to states with more electricity needs. Challenging TPDDL’s petition, NTPC said it has already made significant investments in renovation and modernisation of the generating stations based on the long-term PPA.

NHPC said the weighted composite tariff from its generating stations comes around to `3.27 per unit which is very reasonable as per current market rates. In this regard, the power ministry said power procurers are not entitled to terminate PPAs except through previously agreed terms and conditions. It further said though the public-sector power generators can ask the ministry for reallocation of power, the release of the procurer from PPA obligations is subject to the power ministry being able to reallocate power to any other buyer.

It added that cancellation or termination of PPAs by the procurer on a unilateral basis will seriously affect the scheme of investment in power generation by the public sector units. TPDDL had also sought direction from the CERC for closure/reallocation of old power stations such as NTPC’s Badarpur, Anta and Auriya.

CERC noted that other Delhi power distribution companies — BSES Rajdhani and BSES Yamuna — have also appealed to it regarding the same issue and said it will take an appropriate view on this after hearing all parties.