Share of host states increased from 15% to 50%.
The Union Cabinet today approved a key proposal by the power ministry to increase the share of host states to 50 per cent in allocation of electricity generated from centrally-owned thermal power plants.
It also approved a crucial amendment to the National Tariff Policy to boost green energy generation and help reduce the country’s carbon footprint.
Currently, the allocation of power generated from thermal generating stations is guided by the Gadgil formula, according to which, the host state gets 10 per cent preferential allocation, 15 per cent is kept unallocated as the central government’s quota and the balance 75 per cent is allocated to beneficiary states in the region.
While the central government’s quota, used to tide over periods of acute shortages of electricity, has been kept unchanged at 15 per cent, the share of beneficiary states in the region has been brought down to 35 per cent from 75 per cent.
“Currently, in addition to the 10 per cent preferential allocation, a host state also gets its share also from the 75 per cent allocation kept for beneficiary states in the region, making the effective share of the host state as up to 33 per cent. The Cabinet reviewed the allocation formula and has today increased it to 50 per cent,” said a senior official from the power ministry. The government currently considers two factors before deciding the share of a state falling in the region of the host state — percentage of allocation of plan funds and the percentage of power consumption.
Enhancement of allocation to 50 per cent to the home state will help in developing power projects and increasing generation in the states or regions where there are acute shortages of power, according to a release issued by the government.
The changed power allocation regime also covers power generator NTPC Ltd’s supercritical projects to be set up in the 12th and the 13th Plan periods and all the thermal power plants of the central public sector undertakings to be set up in the future. NTPC’s 14 projects include Gadarwara, Lara, Talcher Expansion, Darlipalli and Barethi Gidderbaha. From the Barethi project, 35 per cent power would be allocated as a special dispensation to UP for the development of the Bundelkhand region, the release states.
In another decision, the Cabinet approved amending para 6.4(1) of the National Tariff Policy allowing state electricity regulators to fix Renewable Purchase Obligations (RPOs) for state electricity distribution companies. An RPO specifies a certain minimum amount of renewable power that a distribution company has to buy for supplying to its consumers.
The National Tariff Policy, notified by the government over four years ago, has already been amended once, in 2008. The current amendment proposal was mooted by the power ministry in 2010 and is in line with the National Solar Mission strategy.
“The solar power purchase obligation for states may start with 0.25 per cent in phase-I to ending in 2013 and will go upto 3 per cent by 2022. This would be complemented by the Renewable energy Certificate mechanism,” a release issued by the government stated.
