R-Power's tariff earnings hinge on commission date

The problems for Reliance Power’s (R-Power’s) Sasan plant in Madhya Pradesh, the country’s first ultra mega power project (UMPP), based on domestic coal, does not seem to end, even as it has commenced operations. The Western Regional Load Despatch Centre (WRLDC), the transmitter of power, has disputed R-Power’s claims on the date of the plant’s commissioning.

WRLDC has petitioned the Central Electricity Regulatory Commission (CERC), questioning a certificate from an independent engineer for the performance test conducted to declare commissioning of the Sasan UMPP. This could impact the tariff R-Power-controlled Sasan Power Ltd would earns from sale of power.

R-Power had produced the test certificate claiming March 30, 2013, as the date of commissioning. If this certificate is taken as the basis, the first year of operation for the plant will be 2012-13, during which it gets about 70 paise a unit (kilowatt per hour) for the power supplied, says a government official asking not to be named. The same tariff is to continue for the second year but it is to rise more than 70 per cent from the third year. If 2012-13 is not considered the first year, the third year - as also a higher rate of tariff for the company - gets pushed by another year.

The electricity generated from the project would be sold to 14 distribution companies across seven states, including Madhya Pradesh, Uttar Pradesh, Punjab and Delhi.

R-Power did not respond to email queries. But on April 4 it had issued a statement announcing the commissioning of its first 660-Mw unit at the Sasan UMPP on March 30. This is the largest integrated power plant and coal mining project in the world, with an estimated investment of over Rs 23,000 crore (Rs 230 billion).

According to clause 6.3.1 (a) and (b) of the power purchase agreement (PPA), the commissioning test should have been carried out in accordance with Schedule 5 of PPA and the result of the test should not have been less than 95 per cent of its contracted capacity. The WRLDC plea contends, the test result is not in accordance with the clause and, therefore, not acceptable.

In its arguments before CERC, WRLDC said Sasan Power was “indulging in intentional misdeclaration of parameters related to commercial mechanism” and had “purported to declare de-rated capacity of 101.38 Mw as commercial on the grounds of load restriction” imposed by the despatch centre. The order on admissibility of the petition would come within a fortnight, CERC chairman Pramod Deo told Business Standard.

He said CERC wanted to decide on the WRLDC petition early, since that would fix the date of commissioning. That would have an impact on yet another petition filed by R-Power seeking compensation for loss of revenue and impact on cost of operation due to change of law.