The power regulator wants feedback on ‘resistance charges’ for low coal reserves

As the Central Electricity Regulatory Commission (CERC) seeks feedback from stakeholders, thermal power plants may soon have to impose ‘resistance charges’ on discs to keep certain coal reserves low.

CERC has sought feedback from stakeholders on how to calculate these charges through a public notice issued on May 13, 2022. All stakeholders have until May 27, 2022 to respond

An amendment to the 2019 Tariff Regulation is proposed to calculate the preventive charge on the basis of the availability of average coal reserves for the last three months (the month for which the power charge was reduced and the two months prior to that month).

In a staff paper on “Methods of Calculating ‘Resistant Charges’ to Maintain Low Coal Stocks by Coal-Based Thermal Generating Stations”, the CERC noted that in recent months, coal reserves have been reported at many coal-fired thermal power plants. As less than the coal storage regulations specified by the Central Electricity Authority (CEA).

It states that such low coal reserves lead to less declared availability (of electricity) by the generating stations, forcing the states to purchase power from alternative sources at higher rates.

To ensure that adequate coal reserves are always maintained at thermal power plants, the CEA has amended the coal reserves rules for coal-based thermal power plants.

In February, 2022, the Ministry of Power issued an instruction to CERC under Section 107 of the Electricity Act, 2003 to make appropriate amendments to the relevant regulations to discourage thermal generating stations from maintaining low cost stocks. Preventive charge for short fall in coal reserves.

Against this background, the CERC has come up with a staff paper, to discourage heat generation plants from maintaining low cost stocks, proposing a method to calculate barrier charges to maintain low coal reserves.

The paper says that failure to maintain coal reserves as per rules affects plant availability and power supply to beneficiaries, forcing those concerned to procure power from alternative sources, which is often costly.

The failure of generating stations to maintain coal stocks as a rule, thus shifting power from alternative sources to customers in the form of high cost of procurement, it says.

According to the revised Coal Stocking Rules (as of December 2021), coal-based pit-head thermal power plants must maintain coal reserves of 12 days to 17 days, depending on the month of the year, as opposed to the conventional 15-day coal stock standard.

Power plants located far from excavation IE non-pit head plants must maintain coal stocks for 20 to 26 days as compared to conventional coal stock rules of 20 days to 30 days.

In order to recover the full annual fixed charge (AFC), it is the obligation of the manufacturing company to provide adequate fuel for its manufacturing facilities and to maintain the availability of the plant in accordance with the relevant regulations, the paper said.

It suggested that if the coal-based production plants failed to maintain coal stocks in accordance with the revised coal reserve rules specified by the CEA, the AFC of such generating stations would be reduced.

Existing regulations already provide for AFC reduction due to lower actual plant availability from NAPAF (Normal Annual Plant Availability Factor).

(With PTI input)