A majority of hydro and thermal power generating stations operate on cost-plus tariff model. (Reuters)
The Centre’s latest push to take electricity and provide last mile connectivity to each and every household in the country that was announced by the Prime Minister Narendra Modi on Monday has come at a time when a number of states have moved to unplug expensive electricity supplied by power stations operated by central utilities, Indian Express said. In last three months, 16 states and Union territories have surrendered an entitlement of 6,625 MW of electricity from mostly inefficient and old power stations operated by Central firms like thermal major NTPC Ltd and hydroelectric utilities NHPC Ltd and THDC India Ltd in recent months, the report added.
Most of the supply is under contracts that states are locked into, where the power generation utility is entitled to extract fixed charges even when distribution firms or discoms are not drawing their allocated share of electricity. Some of these states like Haryana, Madhya Pradesh, Bihar, Rajasthan, and Jharkhand – are under BJP rule, either on its own or in a coalition.
A majority of these hydro and thermal power generating stations operate on cost-plus tariff model. Under this developers get assured returns on investments made and operating costs are passed on to the consumer entirely. The tepid power load trends on account of the continuing sluggishness in the industrial sector have also prompted states move to give up their allocations from these stations, Indian Express said further.
On Monday, Prime Minister Narendra Modi launched the Sahaj Bijli Har Ghar Yojana ‘Saubhagya’, the scheme for easy electricity to every household in the country Speaking at the launch function he announced that the government will provide free electricity connections to four crore rural houses so that poor people also have access to electricity supply. According to Indian Express, Modi said that the decision will cost Rs 16,000 crore the government which will not be passed on to the poor.
