Odisha Energy Minister suggests Central Ministry on steps for reduction of Inter-State Transmission Charges

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Bhubaneswar: Odisha Energy Minister Captain Dibya Shankar Mishra has recently written to the Power Minister, Raj Kumar Singh with a request to look into the issues resulting in steep rise in Transmission Charges of PGCIL.

Odisha meets most of its power demand from the sources located inside the State. However, it avails the necessary additional quantum from the Central Generating Stations located outside the State through the Central Transmission Network of PGCIL paying necessary transmission charges. Over the past decade, it is observed that the National average of PGCIL Transmission Charges, which were in the range of 24 paisa per unit in FY 2011-12 gone up to 85 paisa per unit in FY 2019-20 with a CAGR of 17%, which is very high.

National Electricity Policy and Tariff Policy mandate the Transmission Tariff Mechanism to be sensitive to distance, direction and related to quantum of flow, i.e. to be based on actual utilization of the transmission system. However, despite several amendments of CERC Sharing of Transmission Charges & Losses Regulations, there has been continuous and steep rise in Transmission Tariffs for States like Odisha, who have ironically got most of the Generators inside the State.

After the Grid Disturbances of 30th/31st July, 2012, huge number of Transmission System Assets was added for bringing stability to the System, leading to a considerable percentage of Transmission Assets remaining idle and underutilized, and thus increasing the Transmission Charges. Further, cost of Transmission Assets discovered through competitive bidding are significantly lower than the Cost determined under regulated (Cost-Plus) mechanism.

As a combined effect of huge underutilized capacity addition and price determined through Cost-Plus method, the Annual Revenue Requirement (ARR) of PGCIL for FY 2019-20 has increased to Rs.39,000 Crore from Rs.9,000 Crore in FY 2011-12 with a CAGR of 21%. In addition to these reasons, approach to Uniform Pricing in sharing of Inter-state Transmission Charges have led to increase in total Transmission Charges for Odisha, from Rs.179 Crore in FY 2011-12 to Rs.734 Crore in FY 2019-20 at a CAGR of 19%, resulting in rise of per Unit Transmission Charges from 24 Paisa to 102 Paisa during the said period.

As remedial measure, Captain Mishra has suggested in his letter to the Ministry of Power not to pass on financial impact of any underutilised infrastructure to the Consumers and proposed for funding of the same through some Govt. Fund, like Power System Development Fund (PSDF). He has also requested the Union Power Minister to issue advisory to the Central Electricity Regulatory Commission under Section 107 of the Electricity Act, 2003 to review and align Sharing of Transmission Charges Regulations with the principles of National Electricity Policy and Tariff Policy.

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