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PSPCL to feel heat for increased coal prices
V K Gupta | 21 Jan 2012

The increase in coal cost will increase tariff by about 65 paise per unit for PSPCL consumers.

PUNJAB STATE Power Corporation Limited (PSPCL) will face the heat of revised coal prices in case Punjab State Electricity Regulatory Commission (PSERC) does not take in to account this for tariff revision of 2012-13.

The basic coal will increase by minimum 40 to 50 % for the PSPCL said a senior official dealing with coal. With the transportation charges remaining fixed the overall increase in fuel charges be about 20 to 25%.

The projected gap of Rs. 8983 crore in the  Aggregate Revenue Requirement(ARR)  and Determination of Tariff Petition filed by Punjab State power Corporation Limited (PSPCL)for the year 2012-13 is going to increase a least by 20  % after revision of coal prices from January 1.

Fuel charges of Rs. 4171 crore in the ARR formed the major component of total requirements of Rs. 20415 crore. The current year’s revised charges of Rs. 3595 crore will need further revision as fuel charges of last quarter will increase by 20 %.The present per unit fuel cost at thermal plants is around Rs. 1.75.

According to officials a 12% rise in coal prices is likely to raise cost of generation by about 40 paise per unit. The additional   tariff increase for overall 20 % increase would amount to 65 paise per unit. In case this revision is not taken in to account, state power utilities may not be pass this on to consumers and suffer increased losses.

It may be mentioned that PSPCL has not submitted any specific proposal to bridge the projected gap of Rs. 8983.97 crore. An increase of 55% in Tariff rates for all consumer categories would be required across the board to cover the proposed gap.

Since January 1, Coal India has begun pricing coal based on gross calorific value or heat produced by burning it. Earlier, prices were fixed based on moisture and ash content present in coal. This has increased the number of coal category from the original seven to 17. Coal will be sold in 17 price brands starting from the variety that produces 2,200 kilo calorie to one that produces 7,000 k cal. In between, there are 15 price bands, each at an incremental rise of 300 k cal.

PSERC will take in to account the increase in fuel cost only if PSPCL presents its submissions before the commission, said a PSPCL official.

The tariff order should have inbuilt provisions for unforeseen increase in fuel and transport costs, said a senior PSPCL official.