The debate about the State power utility’s purchase of high-cost power from private firms, which rocked the Assembly a few months ago, found new participants on Friday as sharp divisions within the Tamil Nadu Electricity Regulatory Commission (TNERC) came to the fore at a hearing on the status of GMR’s North Chennai power plant.
Though the power generated by the 196-MW plant costs Rs.12.19 per unit, which is two times more than the price at which the utility can sell power to consumers, two of the three top officials in the Commission gave the go ahead to extend the agreement to purchase power from GMR by one year.
Despite observing that it might “not be prudent to buy power at such high cost, especially considering the financial status of the power utility,” the majority order passed by TNERC’s chairman S. Akshayakumar and his colleague G. Rajagopal cleared the way for Tangedco to do exactly that.
Expressing disagreements with his colleagues, S. Nagalsamy, member, TNERC, filed a dissent note in which he said: “Tangedco incurs a loss of Rs.7.29 for every unit of power procured from GMR. This is a strange agreement that will neither benefit the Tangedco nor the consumer.”
Mr. Nagalsamy had also earlier disagreed with his colleagues on the rationale for a hike in power tariff.
In his dissent, he pointed out that though the State’s agreement with GMR had expired in February 2014, the Tangedco continued to buy high-cost power from the company through the summer of 2014 without the approval of the Commission.
While the extension under question is from February 2014 to February 2015, and would in effect be applied retrospectively, officials within the TNERC say the move is significant because discussions are on to further extend GMR’s contract – by as much as five years.
Mr. Nagalsamy, in his dissent, also said that since the cost of GMR’s power was so “prohibitive,” no payments should be made for the quantum of power that was supplied after the original agreement ended last year.
“The present Chairman of Tangedco has reversed the decision to buy high-cost power in the last three months and the utility is likely to save around Rs.500 crores as a result this year,” he added.
The power utility, on its part, will resort to purchase of high-cost power only in case of emergencies, said a senior Tangedco official.
Commission says Tangedco incurs a loss of Rs.7.29 for every unit of power procured from GMR
