The Central Electricity Regulatory Commission (CERC) is going to announce the new multi-year tariff regulations for the period 2009-2014 in a day or two.
“The new regulations will be announced on Monday or Tuesday,” said CERC Secretary Alok Kumar.
The Electricity Act, 2003, gives CERC the power to propose tariff regulations after every five years. The 2004-2009 tariff period will end on March 31, 2009.
“The guidelines of some states are expiring, so we want to come out with the revised regulation before March 2009,” said CERC Chairman Pramod Deo. Industry experts say that the final regulation will incorporate most of the changes proposed by the commission in its draft regulations, except for some proposals which need to be reviewed.
“The changes proposed by CERC in its draft are largely okay. But there are some issues like the scrapping of Advance Against Depreciation (AAD) and sharing of hydrological risk between generators and buyers that need to be addressed,” said a senior analyst with an accounting and consultancy firm.
AAD is the advance payment that power developers receive to offset the losses caused by the depreciation of power plants. In its draft of the new tariff regulations proposed in September last year, the commission had recommended to scrap it in order to bring about “rationalisation of depreciation rates”.
“If the removal of AAD is approved, it will mean that the developers will have to increase their revenues from operations to pay off their loans. It will adversely affect the generators, as AAD is provided for a period of 25 years while the loan repayment period is about 10-15 years,” said the analyst.
