Electricity regulatory seeks feedback on 'deterrent charges' for low coal stock at thermal power plants

As the Central Electricity Regulatory Commission (CERC) has sought feedback from stakeholders, thermal power plants may soon have to pay 'deterrent charges' to discoms for maintaining lower-than-specified coal stocks.

The CERC has sought feedback from the stakeholders on the methodology for computing these charges through a public notice issued on May 13, 2022. All stakeholders can provide their feedback till May 27, 2022.

An amendment in the 2019 Tariff Regulations is proposed for computing deterrent charges on the basis of average coal stock availability for the last three months (month for which reduction in capacity charges are computed and two months preceding that month).

In a Staff Paper on the "Methodology for Computing 'Deterrent Charges' for maintaining lower coal stock by coal-based thermal generating stations", the CERC has noted that during the recent months, coal stock at many coal-based thermal generating stations were reported as lower than the coal stocking norms specified by the Central Electricity Authority (CEA).

It stated that such low coal stock led to lower declared availability (of power) by the generating stations, which in turn forced States to purchase power from alternate sources at higher rates.

In order to ensure that sufficient coal stocks are maintained at thermal power generating stations at all times, the CEA has revised the coal stocking norms for coal-based thermal power generation stations.

In February, 2022, the Ministry of Power had issued a direction to the CERC under Section 107 of the Electricity Act, 2003 to make suitable amendments in the relevant Regulations to provide for disincentives for maintaining lower cost stock by the thermal generating stations by imposition of deterrent charges for short fall in coal stock.

In this backdrop, the CERC has brought the Staff Paper, to provide disincentives for maintaining lower cost stock by the thermal generating stations, which proposes a methodology for computing the deterrent charges for maintaining lower stock of coal.

The paper says that failure to maintain coal stock as per norms impacts the availability at the plant and the power supply to the beneficiaries, thereby forcing the concerned to procure power from alternate sources, which are often costlier.

The failure of the generating stations to maintain coal stock as per norms, thus gets transferred to the consumers in the form of higher cost of procurement of power from alternate sources, it said.

As per the revised coal stocking norms (in December 2021), coal-based pit-head thermal power plants are required to maintain coal stock in the range of 12 days to 17 days, depending on the month of the year, as against the prevailing coal stock norm of 15 days.

Power plants situated away from the mines i.E. The non-pit head plants are required to maintain coal stock in the range of 20 days to 26 days compared to the prevailing coal stock norms of 20 days to 30 days.

In order to recover full annual fixed charges (AFC), it is the obligation of the generating company to arrange sufficient fuel for its generating stations as per norms and maintain the availability of the plant as per the relevant regulations, the paper said.

It proposed that if coal-based generating stations fail to maintain coal stock as per the revised coal stocking norms as specified by the CEA, the AFC of such generating stations is reduced.

The existing regulations already provide for the reduction in AFC on account of actual plant availability being lower than NAPAF (Normative Annual Plant Availability Factor).

(With PTI Inputs)