Tamil Nadu Power Utility To Save Rs 2,000 Crore Per Year In Discounts

Tamil Nadu Power Utility To Save Rs 2,000 Crore Per Year In Discounts

It is raining discounts for Tamil Nadu Generation and Distribution Corporation (Tangedco) from private thermal renewable energy companies.

Solar power tariff has been falling in the last one year and Tangedco, as per the TNERC merit order, should not evacuate power from high cost power firms when power is available at lower cost. To remain in business, companies like Sembcorp Gayatri Power Ltd, IL&FS and Coastal Energen that signed MoUs with Tangedco at high rates, offered to lower tariff by 0.70 paise per unit.

“As per the merit order, most of the time we could not evacuate power from these private companies as the tariff was around Rs 4.91 per unit.These companies had signed MoUs when the state was facing power shortage,“ a Tangedco official said. Since June, private power generators in Tamil Nadu and Andhra Pradesh began giving discounts to Tangedco.

“Due to the discount, the purchase tariff fell to Rs 4.10 per unit, which is more or less equal to the Kudanku lam nuclear power tariff or wind energy rate. Even among solar power generation firms, there are companies that generate power at `4.40 per unit. It is only after exhausting all other sources, where the tariff is less and when the demand is high that we purchase power at tariffs above `5 per unit,“ said the official.

A calculation done by Tangedco shows that the discom will save not less than Rs 2,000 crore annually on account of generation firms offering power at lower tariffs.“The discount will be given to Tangedco for the next five years. The companies have agreed to continue the discount so that the power generated by them will be evacuated and their business will continue,“ said the official.

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The discom has also asked other solar power companies, including Adani, which have MoUs with Tangedco at Rs 7.01 per unit and Rs 5.10 per unit, to lower their tariff. “If they want Tangedco to evacuate power generated by them, they will have to reduce their tariff. We cannot go beyond the merit order and evacuate power at Rs 7.10 per unit when power is available at `4 per unit,“ said the Tangedco official.

Though Adani signed an MoU for 648MW of solar power in Kamudhi in Ramanathapuram district, the group could not complete the entire capacity before March 2016 to get Rs 7.01 per unit for 25 years.“Before March last year, Adani could complete only 30% of the total capacity . Thus 70% of the power being generated by Adani group is priced at Rs 5.10 per unit. Even this is high and unless they lower their tariff, we will not be able to evacuate power,“ said the official.

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