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Prayas Submission before the CERC regarding the draft MYT regulations 2019

Author(s): Prayas (Energy Group) Publication Date: January, 2019

The Central Electricity Regulatory Commission (CERC) issued a notice requesting comments from the public on the “Draft Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 for the tariff period from 1.4.2019 to 31.3.2024".

The CERC multi-year tariff (MYT) regulations are an important aspect of sector regulation. Out of the 220 GW of thermal capacity, close to a third is regulated by the CERC. Similarly, more than a quarter of the installed hydro capacity falls under the CERC’s jurisdiction for tariff determination. Thus, the MYT regulations framed by the CERC not only decide the tariff of this huge amount of installed capacity, but also act as model regulations for many state commissions. Considering this, it is our submission that the MYT regulations should aim at the following:

  • Simplicity in tariff determination, applicability and implementation as the criteria for introducing any new and innovative changes;
  • Incentive structures for generators should lead to increase operational and cost efficiency, within a “cost-plus” regulatory framework;
  • Responsible plant operation must entail due compliance with environmental norms and regulations;
  • Considering the flux in the sector, facilitate sound planning practices and processes that would limit, if not entirely prevent, creation of stranded assets.

This attached submission by Prayas (Energy Group) is based on an approach that factors in the points listed above.

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