Tata Power seeks total cost pass through for Mundra

Tata Power has moved the Central Electricity Regulatory Commission (CERC) seeking a complete pass through of fuel costs for its 4,000 mw Mundra Ultra Mega Power Project.

It filed its petition on July 19 — almost seven months after the synchronisation of the first unit of the plant — Anil Sardana, managing director, Tata Power, said on Wednesday.

The company has requested CERC to convert the non-escalable portion of tariff to escalable, said Sardana.

A CERC member told DNA Money this amounts to seeking total cost pass through. Should this be allowed, any variation in coal prices will be reflected in the power tariff.

S Ramakrishnan, executive director, Tata Power, said the company had not quoted any figure for the tariff hike but just suggested the methodology to compute the new tariff, as per which, the hike works out to 67 paise per unit.

Power tariff broadly consists of a variable cost — primarily fuel — and a fixed cost, in terms of capacity charge. Under variable cost, again, there are escalable and non-escalable portions.
In its bid, Tata Power had quoted an escalable portion of just 45% — a figure that helped keep the net present value of its tariff low and helped win the project.

Experts believe the bid evaluation and result would have been different had Tata Power quoted 100% escalable tariff.

“Now, converting escalable into non-escalable means nothing but changing the basic conditions of the tender,” a power sector analyst, said, pointing out that players who quoted higher escalation tariff at that time lost the bid.