Power companies welcome solar tariff extension; opposition parties back Nagalswamy

CHENNAI: Opposition parties are crying wolf over the extension of solar power tariff but power producers say further reduction of per unit power price will dampen investor enthusiasm. On Wednesday, Tamil Nadu Electricity Regulatory Commission (TNERC) announced that the per unit tariff of Rs 7.01 to be paid to new solar producers would continue to apply to power plants coming up in the next one year but commission member Nagalswamy disagreed with the decision saying this would cost Tangedco an arm and a leg.The tariff order was to expire in September of this year.
But political parties like PMK have alleged TNERC has showered undue favours on private producers by not lowering the tariff as recommended by Nagalswamy.
The majority of the commission passed the order stating that the existing tariff will continue for one more year as major companies represented to the commission saying it takes more than one year for them to set up the plant. Seven companies including Hindustan Energy Ltd, Emami Cement Ltd and Raasi Green Earth wanted the current tariff to be extended for two more years since setting up solar power plants was a time-consuming process.
Though the commission disallowed their plea, it sympathetically considered their demand and extended the tariff by one more year, said the order. But, in a dissent, Nagalswamy said "There is no second opinion that solar power generation should be encouraged and new solar capacity should be added every year in the state. But at what price?" he asked. "My learned colleagues want to extend the last year price of Rs 7.01 per unit beyond September 2015, when the current price for 2015 has already come down to Rs 5.87 (approx) per unit," the rebel member said.
"The extension of solar power tariff comes soon after Tangedco scrapped the tenders for Udangudi power project. The company is not concentrating on commissioning its own plant and instead goes on a purchasing spree thus deriving monetary advantage. There should be a through probe into the working of the power company," said DMK spokesperson TKS Elangovan.
PMK chief S Ramadoss sought disbanding of the "ineffective" TNERC. He wanted the Central Electricity Regulatory Commission to reconstitute TNERC with new members and a new chief. "Despite [one of the TNERC members] S Nagalswamy expressing his dissent, the commission went ahead with a majority to extend the tariff till April 2016. This according to Nagalswamy is likely to result in a loss of Rs 23,000 crore to Tangedco in the next 25 years," said Ramadoss.
But investors defend the extension. "The current tariff is necessary for solar power companies to invest in the state. Though the input costs may seem to have reduced, service tax has been hiked by 2% and the dollar fluctuates between Rs 62 and Rs 63. All these increase the input costs," CEO and MD of Hero Future Energies Pvt Ltd Sunil Jain told TOI.