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MAR 14 2013

CEA favours price pooling by discoms

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 14th MAR 2013

The State Electricity Regulatory Commissions have objected to the proposal of sharing price burden of imported coal among all distribution firms (discoms), putting price pooling mechanism to uncertainties once again.

The Central Electricity Authority (CEA) proposed since thermal power plants coming up after 2009 would have to bear the heat of price pooling, the discoms, drawing power from new power plants, will also be hit by the excess cost of production. In such a situation all the discoms should share the price of high imported coal in order to maintain price parity. The CEA is also in favour of distributing the burden of imported coal price on all thermal power plants.

State regulators contended that the price pooling mechanism should avoid putting additional pressure on the discoms since most of the countrys discoms were under financial constraints and the government was working out a bailout package for it. If the discoms objected to the principle of burden sharing, it actually goes against the principle of price pooling, a CEA official said.

Union minister of state for coal Pratik Prakash Babu Patil said the price pooling mechanism is based on the principle of blending the cost of imported coal with the cost of domestic coal. There would be no physical blending of coal for supplies. Pooled price or the blended price will only be implied for the power plants coming up after 2009. All power plants that were set up prior to 2009 will continue to get coal at the notified price, Patil said.

A CEA official said since the discoms have to source power from various sources, there is no way that the company can segregate the price of distribution tariff based on the power coming from old thermal units and from units set up after 2009. "So if the discoms have to set an average tariff for consumers, generators should also set an average tariff for the discoms. Such an average tariff was possible if only all the thermal power stations agreed to share the additional burden of imported coal price, the CEA official said.

According to an official of the West Bengal State Electricity Regulatory Commission if such a principle has to be applied, it has to be applied for all thermal units, irrespective of its commissioning date. The principle says even if a plant doesnt use a single tonne of imported coal, it would have to share the price of imported coal. CIL chairman S Narsing Rao said the entire matter was with the government and the company had no clue when the price pooling would take place. Patil, however, made clear that the CCEA will take the final decision on it.


West Bengal Coal India Limited Central Electricity Authority Electricity Regulatory Commission Cabinet Committee on Economic Affairs CIL Electricity

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