CERC Study on Tariff-based Competitive Regime Date

The power regulator, Central Electricity Regulatory Commission (CERC), based on a study that made comparative analysis between 14 projects advised the Indian government not to extend the January 2011 deadline for completely switching to a tariff-based competitive regime. The detailed ‘apple-to-apple’ comparison in 14 projects conducted had shown that “power tariffs discovered through competitive bidding are lower than the cost-plus tariffs”. The report prepared by CERC had excluded additional capital costs and high coal transportation cost which are usually incurred in a cost-plus regime while computing levelised tariff. The study concluded that in 12 out of the 14 projects computed prices under the cost-plus methodology are higher than the levelised tariffs discovered under competitive bidding. CERC was asked to consider a request by state-run National Thermal Power Corp to extend the 2011 deadline so that public sector undertakings could be allowed to set up projects on cost-plus tariff and sign power purchase agreements with distributors.