Electricity Companies transferring burden of inferior coal on consumers

CERS lodges protest against Electricity Companies transferring burden of inferior coal on consumers 

Requests GERC to direct generation companies to claim losses Coal India and other suppliers

Ahmedabad, 1st February 2013: Consumer Education Research Society (CERS) has lodged a protest before Gujarat Electricity Regulatory Commission (GERC) against power generating companies transferring the financial burden of receiving inferior quality coal on its consumers by charging them illegally. The power generating companies in Gujarat have been receiving inferior quality of coal from Coal India Ltd, which has led to an increase in the requirement of coal from 0.6 kg/kWh to 0.75 kg/kWh (increase of 25%); for which the incurred losses are being offset by charging the electricity consumers of Gujarat. Earlier these power generating companies collected a huge amount from consumers for 6-8% loss of coal in Railway transit (from Coal mines to power plants), which is now restricted to only 0.8% after the implementation of Electricity Act. CERS has requested Hon’ble Commission to direct generation companies to claim losses from Coal India Ltd and other coal suppliers, rather unjustifiably and illegally charging consumers. CERS has stated that power companies resort to this since they find it easier to burden consumers than to recover amount from the coal suppliers.

CERS has made following study to strengthen its case:

Grade  of Coal Gross Calorific Value of Coal in Kcal/kWh Pithead price of coal in Rs/MT
   A           Above 6200     3690
   B           5600-6200     2800
   C           4940-5600     1450
   D           4200-4940     1140
   E           3360-4200        880
   F           2400-3360        660
   G           Up to 2400        480

Normally coal of D and E grade is required to generate electricity in power plants. It is shocking that Gujarat generation companies sign contract to purchase ‘D’ grade of coal and receive E grade coal. This increases the consumption of coal, Thereby increasing cost per unit generation and burdening consumers. The cost of coal increases by Rs. 2000-2500 per Metric Ton due to Railway freight charges, as coal is received in Gujarat from distance of more than 1000-1200 kms.

In recent tariff petition filed by two generating companies of Gujarat they have claimed recovery of huge amount due to receipt of poor & inferior quality of coal which has been opposed by CERS. The state owned power generation company, Gujarat State Electricity Corporation Ltd (GSECL) has claimed recovery of Rs. 160.69 crores from consumers due to its inefficiency and receiving inferior quality of coal compared to contracted grade of coal. Similarly Torrent Power Ltd has claimed a loss of Rs. 62.0 crores from its consumers for getting inferior quality of coal. This increase in fuel cost is recovered by electricity companies through GERC approved formula under Fuel Price & Power Purchase Adjustment Charges (FPPPA). Gujarat  is the  first to  introduce  FPPPA  formula  other  States  have  implemented  this  formula  from  1st April 2012 , after  directives  from  Appellate  Tribunal  for  Electricity.

CERS states that situation is not different in other state of India where consumers are being burdened due to receipt of short supply of coal and inferior quality of coal. The power generation companies in collaboration with Coal India Ltd exploit consumers with State Electricity Regulatory Commissions being silent spectators.

For more information, please contact Mr K.K.Bajaj on +91-9374103578

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