Politics of power allocation from CGS-II: DEA comes up with its own formula

The Department of Economic Affairs (DEA) has strongly objected to the power ministry's move to enhance the share of power from the central generating stations (CGS) to their respective home states, from the existing 10%, to 50%, asserting that this will only accentuate inter-regional social and economic disparities in the country and create a biased model of development.

The DEA is of the view that the proposed dispensation will create a situation where the states that are affluent with raw materials, like coal and natural gas, will benefit disproportionately from capacity addition in the power sector. This will result in the availability of adequate power for consumption within those states, while leaving others to face power shortages.Moreover, any surplus power will be sold to the grid at an exorbitantly high prices, thereby increasing the price of electricity for deficit states, claims the DEA.

Not entirely convinced with the power ministry's methodology proposed for allocation of power from new central generating stations (CGS), the Department of Economic Affairs (DEA) has come up with a its own formula, which it claims will promote open access, as well as incentivize state governments to assist in setting up of such power stations within their territories. The DEA has called for moderate enhancement to the home state's share, while providing for additional allocation of power to the home state and other states of the region on the basis of a performance index, depicting the progress made by the states in operationalizing open access.

 This formula calls for distribution of power in the following order: 

Government of India (GoI)

 Fixed:10%; variable: 5%.

 Home state

 Fixed: 30%; variable: 5%.

States in the region (including home state)

 Fixed: 40%; variable: 10%.

The following stipulations would apply for arriving at the variable share of power:

 --The variable component would be made available depending on progress achieved in operationalizing open access, for which an index could be developed by the MoP.

 --The quantum of power reserved under the variable component with the GoI would be used to promote open access in other states of the country, besides the home state and the states in the region.

 --The unallocated component of the power available under the variable component with the home state and other states in the region, would be available to the GoI for being allocated under the variable component available with them.

 --The unallocated power, available with the GoI under the variable component, which has not been able to be utilized for operationalizing and promoting open access, may be sold through the power exchanges and the proceeds thereof shared amongst the GoI, home state and the states in the region as per a pre-defined formula.