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OERC safeguards consumers’ interest, prudence needed in power purchase



The Odisha Electricity Regulatory Commission (OERC), the state power regulator tasked with protecting consumer interests by keeping power tariffs low and avoiding unnecessary increases, has safeguarded the interest of common consumers by warding off a possible hike in tariffs due to imprudence in power purchases by state utility GRIDCO.

Hearing GRIDCO’s petition against Vedanta’s 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 FY23, it has surplus power to the tune of 7037 Million Units. GRIDCO has incurred losses of Rs 430 crore on marginal cost of sale of such surplus power into the power market in FY22.

In fact, during the proceedings it has also been submitted by GRIDCO 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 October 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 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/ kw has per the existing tariffs determined for FY21-22 determined by statutory body. However, GRIDCO has been paying only at Rs 2.5 Rs/kwh on an adhoc basis. The sourcing of power from alternate sources is expected to cost only Rs 2.5 Rs/kwh or lower as only the energy charges are to be paid.

Expressing its concerns, the OERC said, “Even if GRIDCO does not draw power from the above-mentioned power stations atmargin, still GRIDCO has to pay full fixed cost to the NTPC stations as per existing PPAs. In 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 crore 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 IIpower of 600MWis utilised within the state for industrial growth and job creation, instead of creating unnecessary surplus power. OERC has categorically stated that Vedanta’s Unit-II would “provide 300 KTPA molten metal 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 Government of Odisha through IDCO. The said park and expansion of its aluminium 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”.

In view of the above facts, it emerges that OERC has indeed done a great service to the consumers of Odisha by avoiding this accumulating loss and an impending increase in tariff sought by GRIDCO. In fact, post the OERC order, consumers have begun approaching the Commission seeking prudence in requisitioning of power by the state utility, which are being duly heard.

Reacting to the OERC verdict, Utkal Chamber of Commerce and Industry (UCCI)President Brahma Mishra said, “We welcome the OERC verdict to stop purchasing costly power from Vedanta and exercise prudence in power purchase by authorities.”

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