AG view may benefit Tata Power, Reliance on power tariffs

In a major relief to India's power producers like Tata Power, RPower and Adani Power that own 12,000 mw of capacity that use imported coal, the Attorney General of India has said the regulator should have the right to increase tariffs irrespective of the contracts signed by power producers with distribution companies. He, however, warned that the while existing power purchase agreements can be reopened by the concerned regulator for a revision of tariffs, it should no be at the consumers' cost.

The move has cleared the way for a hike in electricity tariffs from private producers as Attorney General Goolam Vahanavati said that rationalisation of tariff is a must and should be done by an appropriate commission.

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"If a PPA breaks down and the generator approaches the central commission for redetermination of tariff, can the central commission say it will not discharge its regulatory functions only because the PPA has already been entered into? Is it so sacrosanct that it cannot be disturbed at all?" he asked.

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The regulator's clarification comes at a time when projects, such as Reliance Power's Krishnapatnam and Tata Power's Mundra ultra mega power projects, are locked in a legal battle over tariff hikes to accommodate the increase in Indonesian and Australian coal prices due to recent changes in mining laws in those countries. This has pushed up fuel costs for all imported coal-fired power projects as well as units based on domestic supplies.

They had also sought legal opinion on tariff-related issues, including the appropriate regulator to settle issues for companies that have signed power purchase pacts with multiple states.