Power utilities fall on draft guidelines for sector

Reuters Market Eye - Shares of electric utilities drop after the power regulator tightened certain rules for tariffs and operations for the sector in its draft 2014-19 guidelines.

The guidelines were posted on the Central Electricity Regulatory Commission (CERC) website late on Monday.

NTPC slumps 11 percent, Power Grid Corp of India falls 3.4 percent, while Tata Power declines 1.5 percent.

Analysts say the guidelines tightened some operational parameters, reducing the use of financial incentives for achieving transmission and generation targets.

The guidelines also propose that some of the savings from fuel costs be partially passed on to consumers.

Analysts warn the proposals could hit returns for the companies. The rules need to be finalised by March.

 

(Reporting by Prashant Mehra)