Decision on Tata Power, Rel Power pleas in 10 days: CERC

After providing a relief to Gujarat based-Adani Power, Central Electricity Regulatory Commission (CERC) is likely to come up with an order on the similar tariff hike petition by Tata Power and Reliance Power in 10 days, S Jayaraman, Member, CERC told CNBC-TV18 today.

Jayaraman is the only member who had disagreed with the order that aims to provide compensatory package to Adani Power following the company’s appeal for tariff hike. Adani Power had appealed to CERC to cancel its power purchase agreements with Gujarat and Haryana after those states refused to pay high tariffs for power produced in the company coal-based plant in Gujarat.

In a separate order Jayaraman argued that, “The decision in the present case will be the precedent to be followed in future. The exercise of regulatory power in such cases will have a cascading effect. In case there is again some development of similar nature, will the Commission interfere again at the instance of the project developer? Will such an exercise of power not jeopardise the consumers’ interest?”

Jayaraman clarified to CNBC-TV18 that the order was applicable only to Adani Power and that CERC will look at petitions from other power producers on case to case basic.

CERC has asked the Gujarat and Haryana state government to constitute a committee within a week from this order, which will study the impact of price escalation of Indonesian coal and suggest a compensatory tariff which can be allowed to Adani Power over and above the tariff agreed upon in power purchase agreement. The committee is required to submit its report by April 30.

Below is the verbatim transcript of the interview

Q: Can you exactly tell us what the Central Electricity Regulatory Commission (CERC) has directed? This committee that it has asked to be formed, is it directed to actually provide the compensation or should that committee decide whether or not to provide compensation?

A: The orders are basically to arrive at a quantum. They will work into the details of the figure and then arrive at what is required compensation. They also have been given some alternatives. They can come out with some alternatives also.

Q: Alternatives as in if you can elaborate a bit? Are there directions as to the variable cost should be based on the cost of the raw material? What exactly is the directive?

A: I will not be explain it to you, because I cannot interpret our own order. The committee has been given total freedom if you see the order. They can go into that thing and then come out with some solution.

Q: There is no case for litigation from hereon because you have voiced dissenting opinion on the same.

A: It is a petition disposed of. Both the parties have argued that, and both the parties are satisfied with the orders and there is no appeal. If any of them is not satisfied there is an option to approach court.

Q: What are the implications for the other cases which are pending on the same issue, the likes from the Tata Power etc. any wade through?

A: It will very from facts of each case. Not necessarily one will be identical to other one.

Q: You have strongly dissented saying that the petitioners should be responsible for their own bidding actions and that it is not the job of the CERC to ensure that they make a profit every time. Could this not be the basis itself for further litigation that even if the committee were to arrive at a decision or the committee members are not arriving at a decision quoting your dissent and saying that they are not responsible to give profit to the power provider and hence not taking into cognizance the CERC’s directive?

A: That is a majority view which is binding on the persons. If somebody is not satisfied he can appeal in court.

Q: Is the committee also going to consider a retrospective angle to this for the past few quarters perhaps for which the likes of Adani Power have borne very high fuel costs on account of changes in Indonesia or will it start from 1st of April?

A: I do not think it has been elaborated. Only when the committee report comes probably we will look into that. They have to submit those details with CERC.

Q: So there was no majority opinion with respect to the retrospective angle in the discussion.

A: Nothing is mentioned in the order.

Q: What is the next step? The committee is formed in a week and how much time do they have to come back to you with this variable compensation number?

A: They were asked to come by 30th April.

Q: Then it will be for the CERC to reject or accept the numbers?

A: Naturally. We have to examine those numbers and then pass a final order.

Q: What if the procurers refused to accept any variable compensation at all, can that situation also arise?

A: It is for them. They have to take a stand.

Q: But that could be a stand they could take.

A: There are not various options. They are all contesting parties. So what stand they will take, whether they will accept CERC order fully or not we do not know at this stage.

Q: How binding will the committee recommendations and thereafter the approval from the CERC be for private producers just in case they say that this is not sufficient for us to cover our high fuel costs?

A: The appeal is there. If they are not satisfied then they have to go to appellate and then there is first a appeal forum, then of course Supreme Court’s second appeal forum is there.

Q: When is the CERC going to come out with a solution on Tata Power as well as Reliance Power?

A: We have reserved the order. We are working on that. We may come up in one week, 10 days also.

Q: On this deadline of 30th April that you have given to the proposed committee would you hear them on 30th April or the submission date is 30th April, so it would be much later that you will speak about it?

A: They have to submit and then we have to go into details. Our idea is to give a fast hearing only.

Q: So it could take until mid-May or first week of May when you will finally pronounce on the committee’s recommendation?

A: It could be. We have to hear the parties and all those things, what procedure will be there.

Q: It could take all of May you think even if the committee were to arrive at a figure?

A: Date is very difficult because both the legal people will be arguing and all, but the idea is to expeditiously dispose of. That is the thing.

Q: The committee is only going to be considering cases from the producers who have put in a petition. It does not cover all the private producers.

A: It is specific order for Adani Power, not for everybody.

Q: I thought there was a generic element to the order as well that where the variable cost has shot up. Section 63 of the Electricity Act will not be sacrosanct.

A: This particular order is only for Adani Power.