Odisha urged Centre to cut in PGCIL transmission tariff

Bhubaneswar: Energy Minister Dibya Shankar Mishra has urged the Centre to look into some of the issues resulting in steep rise in transmission charges of Power Grid Corporation of India Limited(PGCIL).

In a letter to Union Power Minister Raj Kumar Singh, he said theNational Electricity Policy and Tariff Policy mandate the TransmissionTariff Mechanism to be sensitive to distance, direction and related toquantum of flow, i.e. to be based on actual utilisation of thetransmission system.

However, despite several amendments of CERC sharing of transmissioncharges and losses regulations, there has been continuous and steeprise in transmission tariffs for States like Odisha, who haveironically got most of the generators inside the State.

After grid disturbances of July 30 and 31, 2012, a huge number oftransmission system assets were added for bringing stability to the system, leading to a considerable percentage of transmission assetsremaining idle and underutilised, and thus increasing the transmissioncharges, Mishra pointed out.

Further, the cost of transmission assets discovered throughcompetitive bidding is significantly lower than the cost determined under regulated (Cost-Plus) mechanism, he added.

Mishra said as a combined effect of huge underutilised capacity addition and price determined through Cost-Plus method, the Annual Revenue Requirement (ARR) of PGCIL for FY 2019-20 has increased to Rs 39,000 crore from Rs 9,000 crore in FY 2011-12 with a CAGR of 21%.

In addition to these reasons, approach to uniform pricing in sharing of inter-State transmission charges have led to increase in total transmission charges for Odisha, from Rs179 crore in FY 2011-12 to Rs 734 crore in FY 2019-20 at a CAGR of 19%, resulting in rise of per unit transmission charges from 24 paisa to 102 paisa during the period, the Energy Minister said.

As remedial measure, the Minister suggested in his letter to the Ministry of Power not to pass on financial impact of any underutilised infrastructure to the consumers and proposed for funding of the same through some Government fund, like Power System Development Fund (PSDF).

He also requested the Union Power Minister to issue an advisory to the Central Electricity Regulatory Commission under Section 107 of the Electricity Act, 2003 to review and align sharing of transmission charges regulations with the principles of National Electricity Policy and Tariff Policy. Notably, Odisha meets most of its power demand from the sources located inside the State.

However, it avails the necessary additional quantum from the central generating stations located outside the State through the central transmission network of PGCIL paying necessary transmission charges.

Over the past decade, it is observed that the national average of PGCIL transmission charges, which were in the range of 24 paisa per unit in FY 2011-12 went up to 85 paisa per unit in FY 2019-20 with a CAGR of 17%, which is very high.