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CERC proposes “deterrent costs” for low coal shares at energy crops

As coal reserves at thermal energy crops (TPPs) within the nation slipped to 7.6 days on Friday, the Central Electrical energy Regulatory Fee (CERC) has proposed imposing a deterrent cost on energy producing items as a disincentive for sustaining low shares.

The regulator on Friday floated a paper on methodology for computing the ‘Deterrent Prices’ and gave time until Could 25 for stakeholders to share their solutions.

Supporting the CERC’s proposal, a senior authorities official mentioned that amid rising energy demand and stretched coal provides from home sources, the Centre has already requested States to import coal at 10 per cent of their requirement for mixing. Nonetheless, many are reluctant to import as costs of the commodity are at file excessive globally.

“Such a regulation might pressure these State electrical energy boards and their gencos to make preparations for coal for his or her crops. The widespread man shouldn’t endure,” he added.

The regulator identified that shares at many coal-based TPPs in current months have been decrease than the portions set by the Central Electrical energy Authority (CEA). This led to decrease availability of coal by gencos, which in flip pressured States to buy energy from alternate sources at larger charges.

“Failure of the producing stations to keep up coal inventory as per norms thus will get transferred to the shoppers within the type of larger price of procurement of energy from alternate sources,” it added.

The difficulty was additionally flagged by the Energy Ministry with the regulator by a letter on February 22, 2022. Ministry additionally issued instructions to the CERC to make appropriate amendments within the related laws to supply disincentives for sustaining decrease price inventory by TPPs.


CERC mentioned that to get better annual fastened costs (AFCs), it’s the gencos’ obligation to rearrange adequate gas for its producing stations as per norms and keep availability of the plant in line with the related laws.

The AFC of a genco contains return on fairness; curiosity on mortgage capital; depreciation; curiosity on working capital; and operation and upkeep (O&M) bills.

“Subsequently, it’s proposed that if coal-based producing stations fail to keep up coal inventory as per the revised coal stocking norms as specified by the CEA, the AFC of such producing stations is diminished,” the regulator mentioned.

Accordingly, the CERC has proposed including the computing methodology provision after Regulation 42 (7) of the 2019 Tariff Laws.

Coal stocking norms

CEA revised the coal stocking norms for TPPs with impact from December 6, 2021. Accordingly, pithead TPPs are required to keep up coal inventory within the vary of 12-17 days, relying on the month of the yr, in opposition to the prevailing coal inventory norm of 15 days.

Equally, non-pithead crops are required to keep up coal inventory within the vary of 20-26 days in comparison with the prevailing coal inventory norms of 20-30 days.

The authority too has steered disincentives for TPPs if the supply of any coal-based energy plant is decrease than the normative availability on account of decrease inventory of coal maintained by the facility plant as in comparison with the required norms.

Coal shares

On Could 13, the coal shares at home coal-based (DCB) energy crops, with an put in capability of 183 gigawatts (GW), had coal reserves for simply 7.6 days.

The reserves at imported coal based mostly (ICB) crops, with 17,255 megawatts (MW) put in capability, is decrease at 6.four days. Moreover, there are 84 DCBs crops with important shares, whereas 11 ICB crops have shares lower than 25 per cent of their normative requirement.

Of the entire 173 TPPs tracked by the Nationwide Energy Portal, the precise shares stood at 31 per cent of their normative requirement. For the 155 non-pithead energy crops with an put in capability of 164 GW, the shares stood at 24 per cent. Within the case of 18 pithead crops with an put in capability of 39,222 MW, the precise shares have been at 77 per cent of their normative shares.

Revealed on

Could 15, 2022

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