Regulator can hike power tariffs, says A-G Vahanvati

Giving a boost to private power companies like Reliance Power, Tata Power, and the Adani and Essar groups, attorney general of India Goolam Vahanvati has opined that the regulator – the Central Electricity Regulatory Commission (CERC) – should have the right to increase tariffs.

The attorney general has said that rationalisation of tariff is a must and should be done by an appropriate commission. He further pointed out that CERC is the appropriate authority on multi-state issues.

The country's highest law officer says the central regulator can reopen long-term power purchase agreements in cases such as rise in fuel prices.

The opinion from Vahanvati, given in response to queries from the Forum of Regulators - the apex body of state electricity regulators - is a shot in the arm for private power producers which are either already operating or are setting up plants. They have been citing increase in imported coal prices to press for raising tariffs. The states have opposed the move.

But Vahanvati said, "Rationalisation of electricity tariff is also a must. All this has to be done by appropriate commissions. If a PPA breaks down and the generator approaches the central commission for redetermination of tariff, can the central commission say it will not discharge its regulatory functions only because the PPA has already been entered into? Is it so sacrosanct that it cannot be disturbed at all?"

The higher price of imported coal has become a problem for even projects that were built with assured domestic supplies. Most of these projects have to now import coal to bridge shortfall in committed supplies by Coal India Ltd.