Stick to competitive bid rule for power supply from Jan: CERC

Come January and state-owned companies like NTPC and NHPC may have to compete with private firms for distributing power, a move that could lead to lower consumer tariffs, as the sectoral regulator CERC has called for competitive bidding for electricity supply from next year. 

Thus, CERC's this advice to the Government could scuttle NTPC's move to get the tariff policy rule -- which calls for competitive bidding for power supply by PSUs -- postponed beyond the January, 2011 deadline. 

"The tariff based competitive bidding route is a preferred one if it is leading to lower tariffs which obviously is in the interest of the consumers," Central Electricity Regulatory Commission (CERC) has said. 

It has advised the Power Ministry against the proposal of NTPC to amend Tariff Policy to permit the existing cost plus tariff structure for PSU's beyond the present deadline of January, 2011. 

Power Ministry had sought CERC's advice on the proposal of NTPC for amendment in the Tariff Policy to permit continuation of the cost plus tariff structure for PSUs beyond the deadline of January, 2011. At present, PSUs like NTPC and NHPC charge cost plus tariff -- a lump-sum fee as well as a per-unit charge from the distribution companies or discoms. 

Currently, Tariff Policy 2006 allows PSUs to adopt the cost plus tariff structure and this permission expires in January next year after which they have to compete with the private firms for supplying electricity. The discoms would ask for quotes from the generating companies and the lowest bidder would supply power. "CERC advises the government that the deadline of January 2011 for completing the transition to procurement of power through tariff based competitive bidding should not be extended any further," it said. 

However, CERC has asked the ministry to relax the deadline in exceptional cases such as for large size multipurpose storage hydro projects in view of the complexities and construction risks involved. 

"CERC, which is empowered to see the market maturity for deciding whether it (market) is capable to go for competitive bidding," NHPC official told PTI. When contacted NTPC officials declined to comment.