The Central Electricity Regulatory Authority has proposed a 15.50 per cent Return on Equity for thermal power generating stations in the Draft Tariff Regulations that will be applicable from April 1, 2019 to March 31, 2024. The draft tariff regulation is expected to be finalised in February.
A 15.50 per cent RoE has also been proposed for transmission systems including communication system and run of the river hydro generating station. A base rate of 16.50 per cent has been proposed for the storage type hydro generating stations including pumped storage hydro generating stations and run of river generating station with ‘pondage’.
Analysts have been positively assessing the draft tariff regulations and shares of NTPC and PowerGrid have been rising since it has been released on Friday.
The positive sentiment is driven by the proposal to maintain existing levels of RoE, a deviation from the earlier consultation papers that were assessing an almost 1 per cent lower RoE.
On Tuesday, shares of Power Grid Corporation of India were 6.09 per cent up at ₹195.85 a scrip and NTPC shares stood 2.90 per cent higher at ₹147.80 a share from Friday’s closing price.
According to the draft regulations, the fixed cost of a thermal generating station shall be computed on annual basis, based on norms specified under these regulations, and recovered on monthly basis under capacity charge.
“The total capacity charge payable for a generating station shall be shared by its beneficiaries as per their respective percentage share or allocation in the capacity of the generating station. Capacity charge for the month shall be recovered in two parts viz., capacity charge for peak period of the month and capacity charge for off-peak period of the month,” the draft regulations propose.