TN regulator proposes tariff hike for wind energy

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TN regulator proposes tariff hike for wind energy

Industry says proposed tariff is not sufficient and asked regulator to rethink its proposed monthly adjustment
The Tamil Nadu Electricity Regulatory Commission (TNERC) is proposing to increase tariff by about eight paisa for wind energy in Tamil Nadu. Industry representatives have said that the proposed increase would not be sufficient and the state will not be an attractive destination for the investors if the regulator does not rework on tariff and also if it decides to proceed with its monthly adjustment of banking.

The commission has published consultative papers on fixing tariff for wind and bagasse-based cogeneration projects and has asked for feedback by October 27. It has also come out with a consultative paper on power procurement by distribution licensees from biomass based power plants.

In the consultative paper, the commission has pegged the wind energy tariff at Rs 3.59 a unit. The prevailing tariff for wind energy under the previous order is Rs 3.51 a unit for wind mills commissioned on or after the order dated July 31, 2012.

Responding to which, DV Giri, secretary-general, Indian Wind Turbine Manufacturers Association, said tariff in the state was the lowest even though the PLF was good compared to other states. Tamil Nadu accounted for 37 per cent of the wind energy over the country’s installed capacity.

In Tamil Nadu, the tariff is at Rs 3.51 per unit and the average PLF is around 30 to 32 per cent, while in Andhra Pradesh the tariff is at Rs 4.70 and the average PLF is around 28 per cent. In Madhya Pradesh, the tariff is at Rs 5.92 per unit and the average PLF is around 22 per cent.

“Though the PLF in Madhya Pradesh is far lower, the tariff of Rs 5.92 is very attractive for the investor and over and above that he gets 50 paise as GBI (generation based incentive), which is available in Tamil Nadu,” Giri said.

The commission explained that it had adopted a two-part tariff as it did in the previous order of July 2012. This is done when the fuel cost varies and is taken as pass through. The fixed cost for a 20-year period ranges from Rs 1.34-1.81; and the variable cost for financial year 2014-15 is pegged at Rs 2.39 and for 2015-16 at Rs 3.07 a unit.

Effectively, the tariff for the two years will be Rs 4.74 per cent and Rs 4.90 a unit for new cogeneration plants. In the last order, the tariff in the first year was Rs 3.76 a unit.

The second issue, which is alarming, is the proposed policy of monthly adjustment of banking is detrimental to the industry, Giri said. The association has requested TNERC to continue the present policy to attract investment.