Chhattisgarh offers incentives to tap more captive power

Power-deficit Chhattisgarh has given more incentives to captive power producers.

The state has decided to waive the minimum charges that captive power producers (CPPs) pay to the state utilities (to recover the cost of linking the industry unit to the grid).

They have also been allowed to reduce their load demand from the state utility.

"These were the main deterrents for captive power producers and industries," said SK Misra, chairman, Chhattisgarh State Electricity Regulatory Commission (CSERC), which passed the order.

Captive power plants are usually set up by power-intensive industries like steel, cement and aluminium to get reliable and quality power. Captive power comes at a substantial premium.

Captive power producers are not usually allowed to reduce their load demand from the state utility even though they generate their own power and would like to continue to pay the minimum price to the utility.

The commission has allowed the reduction of the demand by industrial units from the state utility to come down to zero.

The payment security for captive plants selling to the state utility has been ensured through a letter of credit mechanism. Misra said this would encourage captive power producers to sell surplus power to the state power board.

Captive power generators in the state have also been given the flexibility to buy power from the boards. The commission had also fixed the tariff for the surplus power to be bought by the board, said Misra.

The average cross subsidy cost (65 paise per unit for 132 kv load) in Chhattisgarh is the lowest in any state.

Since Chhattisgarh is coal-rich, captive power plants here can bank on a predictable cost of fuel, unlike in cases where other fuels are used.

For example, the cost of power produced by diesel-based captive power plants varies between Rs 8 per unit and Rs 12 per unit, says a Central Electricity Regulatory Commission (CERC) official.

About 15,000 Mw of the 20,000 Mw installed captive power capacity in the country is connected to the grid.

However, only about 6 per cent of this flows into the grid due to various issues. Experts blame this on states levying high cross-subsidy and wheeling charges. CPPs also demand exorbitant rates at times.