The Odisha Electricity Regulatory Commission (OERC), the state’s power regulator, has safeguarded the interest of consumers by warding off a possible hike in tariffs due to mismanagement in power purchases by state utility GRIDCO.
Hearing GRIDCO’s petition against Vedanta Plea to utilise its Unit II power plant for its own operations, the OERC raised a number of concerns regarding GRIDCO’s power sourcing practices. As per GRIDCO’s own submission to OERC in a tariff hike application (ARR) filed for next year, it has surplus power to the tune of 7037 Mus. GRIDCO has incurred losses of Rs 430 Cr on marginal cost of sale of such surplus power into the power market in 2021-22 fiscal year.
GRIDCO has maintained that Odisha has become a power surplus state and is now exporting power. The surplus power is to the tune of 1000-1500 MW, a figure which is recorded in the order. Previously, in Oct 2021, the OERC observed that public power utility GRIDCO and power consumers at large could benefit from surrendering and non-requisitioning of power from surplus PPA (Power purchase agreements), after hearing submissions from the state utility, generators, and consumers. The OERC had clearly brought out that GRIDCO is surplus in power and purchasing more power than the actual state demand by 8500 million units per annum.
Also, OERC had noted that GRIDCO is paying fixed charges to plants like Farakka, Kahalgaon, and Barh without off-taking the power from these plants. This dead loss of fixed charges would become useful due to the surrendering of surplus PPAs with generators like Vedanta’s Unit II, which would save about 277 Cr. for the state annually, thereby reducing power tariffs. Interestingly, Vedanta’s actual tariff is 2.80 Rs/ kwh as per the existing tariffs determined for FY21-22 determined by the statutory body. However, GRIDCO has been paying only 2.5 Rs/kwh on an ad-hoc basis. The sourcing of power from alternate sources is expected to cost only 2.5 Rs/ kwh or lower as only the energy charges are to be paid.
“Even if GRIDCO does not draw power from the above-mentioned power stations margin, still GRIDCO has to pay a full fixed cost to the NTPC stations as per existing PPAs. In the future, if GRIDCO needs more power than the present estimated State requirement, then it may draw the unscheduled power from those power stations, which are presently beyond the merit order, i.e., TSTPS-II(partially), KHSTPS-II, FSTPS-III. For these central stations, fixed costs are to be paid irrespective of drawal from them. However, if GRIDCO surrenders M/s Vedanta power, they won’t have to pay the fixed cost of Rs. 399.42 crores at 85% of availability. We are giving a comparative table to show the benefit of drawing power from these power stations without drawing power from M/s Vedanta.”
OERC has ensured that Vedanta’s Unit II power of 600MWis utilised within the state for industrial growth and job creation, instead of creating unnecessary surplus power. OERC has categorically stated that Vedanta’sUnit II would “provide 300 KTPA molten metals from its smelter units to downstream industries in the newly set up Aluminium Park at Jharsuguda. The progress on the same is being reviewed by the Chief Secretary through IDCO. The said park and expansion of its aluminum smelter unit would provide economic value addition to the State as well as provide livelihood opportunities to more than four lakh people which would also add in the ‘Make in Odisha’ initiative”.