State-owned power generator NTPC Ltd is facing a significant hit to its fuel cost recovery on generation for the five year period 2015-19 on account of unfavourable regulatory tariff orders passed by Central Electricity Regulatory Commission (CERC).
The Energy Charge Rate (ECR) approved by CERC is lower in the range of 20 per cent to 31 per cent than what was sought by NTPC. The difference in the ECR is due to the change in the basis for measurement of the gross calorific value (GCV) of coal to ‘as-received” as against “as fired” basis,” ratings agency India Ratings and Research said in a note.
The orders so far passed by CERC cover only around 7,000 Megawatt capacity. Adding to the firm’s woes, the commission is likely to follow the same principle for the rest of NTPC’s plants leading to large differences in fuel cost recovery. “However, India Ratings expects NTPC to contest the same through regulatory process and initiate steps to install the infrastructure for measurement of coal GCV on “as received” basis. There is also a possibility of a dialogue between NTPC and Coal India (CIL) to resolve differences over coal grade slippages.
According to CERC’s tariff regulations for the period 2014-2019, coal Gross Calorific Value (GCV) has to be measured at the point of unloading the coal at the power station gate, referred to “as-received” basis as compared to the earlier regulations which allowed measurement of coal GCV at the point before coal is fired, referred to “as-fired” basis.
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In its petition to CERC, NTPC had been highlighting the lack of infrastructure at its plants as the reason for its inability to measure coal GCV on “as-received” basis. Therefore, CERC, in the absence of data on “as-received” basis, has now considered the GCV on “as-billed” basis while arriving at the ECR leading to the consideration of a higher GCV rate.
The regulator had decided to shift to the “as-received” basis of GCV measurement so that the generating company bears the inefficiencies post unloading of the coal and to ensure the generating company takes up the coal grade slippage with the coal supplier company and resolve it. NTPC had been highlighting problems regarding the measurement of GCV on “as-received” basis and was seeking “as-fired” basis on multiple grounds — coal samples taken after crushing for firing are of small and homogenous size compared to samples taken from wagons which are big and heterogeneous.
Also, sample collection time from wagons is longer leading to demurrage charges and safety for personnel is better when samples are taken after crushing. Finally, samples taken from the wagons may not accurately represent coal quality because often good quality coal could be loaded at the top and superficial layers become dry during the transportation while the moisture percolates inside the wagons to the lower layers.
Experts say the difference between the GCV on “as-received” and “as-fired” basis is governed by the ambient temperature, type of coal and duration for which coal is stored. According to Central Electricity Authority (CEA), heat loss during this time should not be more than 0.1 per cent in GCV value, which is in line with international studies. However, in this case the difference between the GCV of the coal works out to 20 per cent to 31 per cent.
India Ratings noted that NTPC has been contesting the GCV calculation and had been highlighting the grade slippages in the quality of coal. “The grade slippage discussion between CIL and NTPC has become more visible post the January 2012 change in coal grading methodology to GCV-based grading from the earlier used heat value based system of grading,” it said.
NTPC over the last two years has seen tightening of operational norms including the station heat rate, specific consumption and auxiliary consumption, change in the basis for providing the capacity charge incentives to plant load factor instead of plant availability factor and lower tax arbitrage. These factors have had a negative impact on the company’s profitability. Jonas Siegenthaler Womens JerseyShare This