Power producers seek hike, APTransco seeks cut

The Andhra Pradesh Electricity Regulatory Commission (APERC) is expected to have a difficult task ahead in the form of fixing tariff for the power supplied by non-conventional energy projects.

APTransco has proposed a cut in the existing unit price by more than Re 1 while power producers have requested the APERC to double the existing unit price in a recent public hearing.

The annual Tariff Order for the year 2004-05 to be issued by the APERC is expected to be released on 24 March.

APTransco has proposed to the APERC that prices of non-conventional energy sources (NCES) being purchased by the power utility be cut from the existing Rs 3.48 paise to Rs 2.37 paise per unit.

In the current financial year, APTransco has spent close to Rs 415 crore on purchases from non-conventional energy projects, which include wind, mini-hydro and bio-mass plants to the extent of 1,802 million units (mu).

This works out to about 5.22 per cent of the total cost on purchases being made by the power utility. APTransco spends Rs 7,950 crore annually on power purchases. APTransco is expected to handle about 46,422 mu for the year 2004-05.

Supporting her case in asking to cut the existing unit price, Rachel Chatterjee, CMD of APTransco, argued before the commission that the APTransco proposal was worked out on the basis of the detailed project reports of these non-conventional energy projects.

"I am not proposing a minimum price. I am proposing a reasonable price which will still enable the developers to get their reasonable return on equity," she argued in the recent public hearing.

While requesting the hike in purchase price by the APTransco, the private developers said that unless the price is increased to a considerable level their projects would not be viable as, according to them, the fuel cost and other incidentals have gone up.

They also pointed out that their plants were already operating at low plant load factors (PLF) unlike thermal power projects.

If the developers' request is accepted as it is by the APERC, the power purchase bill of APTransco will increase from Rs 425 crore to Rs 806 crore.

The issue of price has another angle. The Non-Conventional Energy Development Corporation of Andhra Pradesh (NEDCAP), which is the nodal agency for the non-conventional energy projects operating in the state, has taken a lenient view on the developers' plea.

Participating in the public hearing NEDCAP officials have proposed to the APERC that the current unit price be raised by at least 50 per cent. NEDCAP proposals will increase the existing power bills to Rs 681 crore.

The future viability of existing projects are also at stake if prices are lowered, according to developers.

Out of the 98 NCES projects operating in the state, APTransco is buying power from 59 plants. While 15 plants have been set up for captive purposes, the remaining 24 plants have tied up for third party sales.