Politics of power allocation from CGS-I: PC amenable to even higher share for home states

The state-run, NTPC, seems to have found a great ally in the Planning Commission (PC), which has asked the Ministry of Power (MoP) to be flexible when it comes to allocating the home-state share of power to states that host central generating stations (CGS).Against the MoP's proposal of allowing a maximum of 50% of power to be allocated from new stations to their respective home states, the PC has asked the ministry to be open to the allocation of up to 75% of power, if needed, to facilitate development activities.Further, the PC has also asked the ministry to allow the sale of 10% of power via open access, in line with the stipulations of the Electricity Act, 2003.The power ministry has, however, taken the view that if such a large quantum of power is allotted to the home state, not much would be left for the neighboring states, detrimental to the overall infratsructure development of the country.Further, decisions regarding open access may only be taken once the second Task Force on operationalization submits its report. 

The Department of Economic Affairs (DEA) has also criticized the MoP`s proposal of higher power allocation to the home states on the ground that this would severely impact the installation of merchant power capacity.

The DEA has asserted that allowing such enhanced shares to states via long term power purchase agreements will create allegedly unhealthy competition between the public and private sector power generating companies, with the latter likely to offer even higher shares of power to the concerned states, in a bid to obtain an edge over their government counterparts.

This will not only reduce the quantum of power available for merchant sale, but also eat-up the demand for short-term power in the open market, asserts the DEA.