Power board draws regulatory body’s ire
Rakesh Lohumi
Tribune News Service

Shimla, September 20
The State Electricity Regulatory Commission has pulled up the state power utility for issuing power availability certificates (PACs) on recommendations of the State-Level Single Window Clearance and Monitoring Authority without proper evaluation.

It has led to a situation where it will have to buy power on short-term basis from the market at very high rates and supply it to power intensive units at a lesser tariff.

“Our understanding is that adequate evaluation of each case is not being made by the power board before it gives its views in the single window authority. In future, in case negative-list industry or power-intensive industry is supported in these structures, the power board will require a commitment from the government to mitigate the uncovered costs from year to year,” says an observation made by the commission in its final order in the case pertaining to grant of PACs to two big steel units requiring 88 MW in Sirmaur district.

The commission pointed out that the board was facing widening demand and supply gap, especially in winter months, as a result of which it would have to incur additional expenditure on this account and this position would continue till 2011-12.

It would certainly impact the tariff determination in relation to the board and also likely to affect the interest of other power consumers in the state.

While considering proposals for PACs the board should examine the disproportionate and adverse impact on its aggregate revenue requirement (ARR) as also to the stability of the grid and ask the government to make provision for subsidy in case the single window institution rides rough shod on the board’s objection, it asserted.

Power commitment, by way of issuance of the PAC, was a contractual obligation to supply the electricity to prospective entrepreneurs on some future dates.

As such the state government and its functionaries had to be very vigilant in making future commitments and in providing incentives to the prospective entrepreneurs to make their investments in setting up their industrial units in the state.

Normally, before such a project is undertaken, a detailed consideration of the
need, viability, financing and cost-effectiveness is carried out at various levels
in the government.

If there is a good reason for a project not to be undertaken, then objection has
to be raised when it is under consideration and before a final decision is taken
to undertake it.