Embattled power producers such as GMR and GVK have received a shot in the arm from the Andhra Pradesh Electricity Regulatory Commission.
The regulator has notified the Expensive Power Supply Scheme (EPSS), allowing generation firms to sell electricity produced using RLNG (re-liquefied natural gas) at a higher cost.
It has also allowed distribution companies (discoms) participating in the EPSS to buy RLNG-based electricity from gas-based independent power producers (IPPs) and supply it to consumers on ‘no profit, no loss basis’.
The regulator had earlier allowed GVK extension (220 mw), GVK’s Gautami (464 mw), GMR’s Vemagiri (370 mw) and VBC’s Konaseema Power (444.08 mw) to import RLNG and produce power.
However, there were concerns that RLNG-based energy could be more expensive. Distributors in AP, too, had concerns over tariff structures.
AP had been suffering a power shortage of 2,000 mw and blackouts three days a week, severely impacting industrial units. Generation plants using Reliance’s KG basin gas production were operating at less than 40% plant load factor. The option of using alternative fuels like LNG was not attractive given the prospect of higher cost of power.
Discoms need to seek detailed applications from consumers who desire to use the expensive RLNG-based power over and above the permitted demand limit. “The load factor to be specified by the consumer shall not be less than 60%,” the regulator said in its order.
Tariff under the EPSS will be based on the adjustment for the losses approved at the respective supply voltage level. That is, it will be based on the actual generation cost (fixed cost and variable cost), working capital cost incurred by the discoms and grossed up with voltage-wise losses, up to the supply voltage, the regulator said.
Industry has welcomed the clarity (on procurement and supply of high-cost power) that Friday’s notification has brought to both producers and discoms.
“Producers will be ready to use RLNG now. It remains to be seen if discoms would be willing to buy the expensive power. Industrial consumers, too, will do their calculations now,” said a senior member of industry body CII.