The Maharashtra Electricity Regulatory Commission has finalised the tariff for sale of power by wind energy projects in Maharashtra.
MERC chairman P Subrahmanyam, and members Jayant Deo and Pramod Deo, said this would facilitate inflow of private investment into this sector while promoting the interests of consumers and other stakeholders, and to accelerate the development and maturation of wind power technology in Maharashtra.
Apart from other stipulations, the price at which energy is purchased by Maharashtra State Electricity Board and other utilities from such projects would be Rs. 2.25 per unit in the base year (1994-95).
This would increase at 5 per cent every year for the first 10 years from commissioning.
There would be no increase for the next three years, and a 5 per cent annual increase in the rate thereafter for the next seven years, thus covering the estimated life of the project (20 years).
The period for which the tariff structure would be applicable has been reduced from 20 years to eight.
This has been done taking into consideration the sales tax and other incentives which would enable the developers to discharge their loan obligations in a shorter period, while still leaving them with adequate return. Thereafter, such projects could seek market returns.
For the purposes of tariff determination, the commission has distinguished between three categories of wind energy projects depending upon when they were commissioned:
- Projects commissioned before the relevant Regulations of the Commission were framed, i.e. before December 27, 1999;
- Projects commissioned after December 27, 1999, but before April 1, 2003, after which sales tax and certain other benefits were no longer available from the state govt; and
- Projects commissioned from April 1, 2003 onwards.
Moreover, investment in these projects was based on the policies declared by the Maharashtra government at that time. Such projects would continue to be governed by those policies.
The Maharashtra government has also discontinued sales tax benefits to such projects from April 1, 2003.
In the case of projects commissioned from that time and up till March 31, 2007, i.e. the close of the 10th Five-Year Plan, the MERC has fixed the tariff for sale of power to MSEB and other utilities at Rs. 3.50 per unit for the first year from the date of commissioning of the project.
This would increase at 15 Paise per unit annually for a period of 13 years.
The net energy delivered to the grid for self-use or for sale to third parties would be adjusted against the consumption made as per the time-of-day (TOD) tariff time slots.
The MERC has also stipulated various other modalities for power purchase from wind projects commissioned after December 27, 1999.
Apart from the rate of purchase, wheeling charges would have to be paid to the concerned utility at 2 per cent of the energy wheeled.
Pending further study, the transmission loss charge has been fixed at 5 per cent.
Due to the nature of wind energy projects, the cost of buying power from them would be higher in the initial period.
The MERC has put a ceiling of 750 MW on capacity addition for sale of power to MSEB and other utilities from April 1, 2003 to March 31, 2007 to ensure that there is no significant increase in the tariff charged by the utilities to their consumers.
