Fresh study before executing CII captive power plan

The proposal submitted by the Confederation of Indian Industry's Pune office, which envisaged generation of 90 mw captive power to tide over the power shortage and reach a no load-shedding scenario by March 2006, has received a setback as the Maharashtra State Electricity Distribution Company (MSEDCL) decided to study the exact extent of power shortage afresh before making the plan operational.

CII Pune had submitted a proposal to the Maharashtra Electricity Regulatory Commission (MERC) which said 30 of its members had shown willingness to captively generate 90 mw power during the peak demand hours, thereby doing away with the load-shedding currently faced by power consumers in the Pune urban circle.

MSEDCL Managing Director Sanjay Bhatia on Sunday told a gathering of MSEB Engineers' Organisation that the proposal submitted by CII Pune in October 2005 had been based on a peak power shortage of 90 mw.

"The situation has changed with the advent of summer, and we will have to rework the shortfall estimates as well as the power tariffs," Bhatia said.

"From a situation when we had a load-shedding schedule of one hour, we have reached a situation of three-hour load-shedding. The peak hour shortfall of 90 mw stated in the proposal is likely to reach 250 mw in the immediate future, and a reworking of the proposal is necessary," he said.

The MERC, after hearing the proposal, had passed orders in January 2006 directing MSEDCL to complete the necessary arrangements in two weeks to make the proposal operational.

MSEDCL had, thereupon, asked for time to set up meters at the generation and connecting points and also to consider the concessions demanded by CII in terms of sales tax exemptions on diesel.

The captive generation would increase the power tariffs payable by the consumers for which the MSEDCL would have to rework the tariffs schedules.

This 'first of its kind' proposal has now entered the realm of uncertainty as the distribution company expects a 250 mw power unit going operational in March and the resurrected Dabho Power Company commencing production of 700 mw by May. The correct extent of shortage will have to be arrived at in view of these developments.

Voluntary organisation, Prayas Energy Group, which has a very active research group for energy-related issues, sees many ambiguities in CII's proposal. Prayas' Nikit Abhyankar said the proposal lacks clarity in terms of how much incremental tariff the consumer has to pay.

"The tariffs will be reworked only when the MSEDCL approaches the MERC with its proposals on the ARR (annual revenue requirement). Till this exercise takes place, the MSEDCL will have to make financial arrangements to pay for the power generated by the industries captively. Even the basis for payments to be made to the industries is not clear, as we don't know whether they will be paid on the basis of how much less power they have drawn or how much they have actually generated," Abhyankar said.