The Central Electricity Regulatory Commission has told the power ministry that a one-size-fits-all approach to power subsidy is not viable. It should be left to each state's electricity regulator and the forum of regulators should be allowed to evolve a consensus on the issue, CERC said.
The commission is also against the government's view of doing away with advance against depreciation for meeting loan repayment. "Advance against depreciation clause is not required only in case of long-term loans. With loan tenures getting shorter, it is definitely required," CERC Chairman AK Basu said after the third meeting of the forum of regulators.
The power ministry recently issued a clarification stipulating that a project for which appraisal by financial institutions started before January 6, 2006, would be treated as falling outside the scope of clause 5.1 of the tariff policy, if the final power purchase agreement was filed before the regulatory commission by September 30, 2006. The forum of regulators feels that such a stipulation may encourage non-serious projects to come up.
The CERC has also asked state electricity regulatory commissions to carry out a survey of captive power generation in their respective states and take measures to bring the surplus to the grid. "Distribution licencees should contact the captive power generation players to firm up supplies," Basu added.
The commission has constituted three groups to recommend on the concept of distribution margin as the basis for allowing returns in distribution business, review the return on equity in distribution and deliberate on the operating norms for distribution.
Regarding transmission charges, the regulator believes that the minimum guarantee charge and the parallel operations charge should be either deleted or rationalised.
On power trading, Basu said the electricity regulators of the buying states would buy power through a process of competitive bidding or through the lowest rate quoted after an enquiry.
He also suggested that the distribution companies should come up with a buying proposal at the time of filing their ARRs. "Buying regulator shall fix the buying ceiling price," Basu added.
On over drawing of power by habitual offender states like Madhya Pradesh, Uttar Pradesh and Jammu and Kashmir, Basu said CERC had recommended that dues need to be deducted from the state's central plan allocation.
