Indian power utilities unhappy with pricing methodology

Indian power utilities refused to enter into Transmission Services Agreement  with the Power Grid Corporation of India Limited due to the new 'Point of Connection pricing methodology.


 Much of the resistance has been directed at the substantial increase in the transmission tariff, following the regulation. Moreover, the charges are still higher for state generators. Orissa and Bihar, for example, are required to pay more while scheduling power from an inter-state generating station located within the state.

Resistance has also been expressed over the basis of calculations for the tariff. Private power producers have complained that the PoC calculations are done on the basis of average energy scenario, instead of the required five seasonal scenarios, with peak and off-peak periods.

In its defense, CERC has asserted that since it did not receive individual data from the states, it had to resort to using the average energy scenarios, instead. In fact, it claimed that a single PoC rate for the year is easy to comprehend and administer and gives a more stable signal.

Utilities have also alleged that the present scenario, where actual PoC rates are converted into slabs, has resulted in cross subsidization.

Nonetheless, the power watchdog has defended use of the slab approach, terming it to be a variant of the 'Min-max Fairness' principle, which would enable easy comprehension by the stakeholders as well as provide stability and certainty to the transmission pricing signal.