Wednesday 22 February 2017

States free to give coal to efficient private power producers









News:


The power ministry on Tuesday framed rules giving state governments the freedom to get power generated by the most efficient private companies in the state using the coal allocated to states by miners under a new system that replaces the earlier rigid allocation of coal to individual state-owned plants.

The rules framed in line with the cabinet decision of 4 May last year rationalising coal allocation, to allow states to invite power tariff bids from independent power producers at which they are willing to sell power using the coal that the state is willing to assign to them.

The landed cost of power from the private generation company including transmission charges has to be less than the variable generation cost of power from the state power generation unit, which the private player is seeking to replace, according to the rules released by the power ministry. Power tariff has two components—a fixed cost of the power plant and the variable or the energy cost.

The private power producer has to assess transmission infrastructure availability before making the bid. The state will check with the ministry of railways before assigning coal to the winning bidder whether transportation of the fuel to the private player’s plant was feasible.

The easing of the coal allocation rules is part of the government’s efforts to reduce power generation cost by utilising the fuel at the most efficient plant and enable distribution companies to buy more power.

On 21 December, coal and power minister Piyush Goyal had said that he had cleared the plan to allow state-owned and private companies to swap their allocations of coal so that power plants can source the fuel from the closest available location and improve power generation efficiency. The minister had also said then that eventually he would like such swap of coal to be allowed across sectors of the industry such as power, steel or cement.





My View:


The initiative by Government is quite good which will help to reduce the cost of electricity. But to come under the policy the rules are quite tough as stated in news. There should be some flexibility to private generation companies. 



Monday 6 February 2017

35 open access companies return to Maharashtra power discom's fold


News:

Altogether 35 firms drawing power for their units have decided to become consumers of the Maharashtra State Electricity Distribution Company Limited (MSEDCL) again.

The 35 companies were among 130 firms in the Konkan region of the state power utility and had been buying power from private producers as part of the open access system introduced last year.

These consumers are known for prompt and huge payments, as they buy power in bulk. The companies had opted for the open access system. It allows the firms to buy power from independent producers located anywhere by paying some duty and the wheeling (carrying) charges to the electricity company.

What came as a boon for MSEDCL is that the state energy regulator, Maharashtra Energy Regulatory Commission (MERC), in November 2016 tariff order allowed it to increase the wheeling charges and duty for consumers buying power from other producers, which use its network to supply to its consumers.

"The result was that the electricity tariff of consumers buying power from private players became costlier. This is the reason why some of these companies have decided to return to us," a senior MSEDCL official told TOI.

The officer added out that the tariff provided to them by the independent producers was lower than that of MSEDCL. But the new conditions mean that the companies have to cough up more as power tariff.

"Had the regulator's ruling not come, these firms would not have approched the MSEDCL for power supply," said Siddharth Soni, a consumer representative from Nashik.

MSEDCL officials are, understandably, happy with the development. "We are reaching out to the companies promising best services. As a result, we are gaining back their confidence. The tariff and other conditions are favourable no doubt, but the company has also improved its services and infrastructure over a period of time," MSEDCL regional director Satish Karpe said.

My View:

Such orders will reduce the competition from the market. There are many pvt players which will get affected by such orders. Many power trading companies will  get affected as there consumers will be moving towards DISCOM's. Government should take necessary steps otherwise it will ruin the open access market in Maharashtra.