Tata Power-Distribution Seeks Approval for Short-Term Power Purchase for October

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On August 26, 2022, Tata Power Company Limited Distribution (TPC-D) submitted a petition to adopt a tariff for the purchase of 75 MW round-the-clock power (RTC). Following the tariff-based competitive bidding guidelines published by the Ministry of Power (MoP), Government of India (GOI), on March 30, 2016, Tata Power Company is looking to acquire electricity temporarily for October 2022.

Under Section 94 (2) of the EA, 2003, Tata Power Company Limited Distribution has also submitted interlocutory application (IA) No. 22 of 2022, dated August 26, 2022, asking for an immediate hearing on the subject matter.

TPC-D is requesting authorization for short-term power purchase to satisfy the demand in the petition. They stated in the petition that, by Regulation 22 of the 2019 multi-year tariff regulations, the distribution licensee may acquire more electricity throughout the year in addition to the power procurement strategy for the control period authorized by MERC.

They added that the rate discovered through competitive bidding, which is Rs 7.54 per unit, is higher than the rate taken into account in MYT Order, which was Rs 3.56 previously allowed for the short-term purchase.

The pricing discovered through competitive bidding for short-term power procurement for October 2022 is higher than the rate permitted by the Commission in TPC-MYT D’s tariff order, according to a brief outline of the petition provided by TPC-D in the e-hearing that was held on the 13th September 2022.

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In response, the Commission urged TPC-D to explain why the electricity procurement proposal only covered October 2022, as opposed to the extended bid term from 15 July 2022 to 30 June 2023 that was placed on the DEEP portal. Additionally, they questioned TPC-handling D’s of the demand from July 2022 to September 2022.

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Additionally, whether the bid would be accepted for future purchases or whether TPC-D will issue a new bid for the same thing. The Commission also asked the TPC-D to clarify whether the green shoe option was made available to both bidders.

Since these problems were not covered by the petition, the Commission instructed Tata Power Company Limited Distribution to provide additional representations on them within three days.

On June 26, 2022, TPC-D released a single bid for the short-term power purchase for the period from July 15, 2022, to June 30, 2023, with varying monthly quantum dependent on the anticipated shortfall.

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Different pricing and quantities were offered by the bidders every month. Except for October 2022, TPC-D did not issue a Letter of Award to the interested bidder for the period from July 2022 to June 2023 because the rates found in the reverse auction were higher than the going market rates.

If any more power is needed during these times, Tata Power Company Limited Distribution intends to purchase it via one of the short-term power purchase options, such as power exchanges.

The average cost of short-term power purchases for July 2022 and August 2022 was Rs. 5.07 per unit and Rs. 5.63 per unit, respectively. These costs are significantly less than the costs identified through the process of competitive bidding (Rs. 9.09/kWh for August 2022). Because of this, even though the bid was for a longer duration, TPC-D has only contacted the Commission for the requirement of October 2022 to reduce the cost of the power purchase.