Himachal Pradesh Sets Tariff for Kinnaur’s 300 MW Hydro Project

Tariffs set for control period FY 2019-20 to 2023-24

July 5, 2019


The Himachal Pradesh Electricity Regulatory Commission (HPERC) has set the tariff for sale of power from BASPA II, which is a 300 MW hydropower project located on river Baspa (a tributary of river Satluj), located in district Kinnaur.

The power will be sold to Himachal Pradesh State Electricity Board Ltd. (HPSEBL) from FY 2019-20 to 2023-24.

The state commission has issued the order after being requested by JSW Hydro Energy Limited, the owner of the BASPA II hydropower project. JSW Hydro had filed a petition for the determination of tariff for the control period FY 2019-20 to FY 2023-24 as prescribed under the multi-year tariff filing procedures set out under the power purchase agreement.

JSW Hydro Energy Limited had also requested that the commission allow an additional capital expenditure of ₹110.5 million (~$1.6 million) during FY 2018-19 to FY 2023-24. The company claimed the additional capital expenditure under the heads of an upgrade in technology, prudent utility practices, and ‘Change in Law’.

While determining the tariff, the state commission considered the rate of interest on the working capital on the lines of State Bank of India’s prime lending rate of 13.80% as on April 1, 2019 for the entire control period, along with the return on equity (RoE) at an annual rate of 16% of the equity component of the capital cost.

The HPERC has not considered any secondary energy generation for approval of the tariff. The incentive for secondary energy generation will be billed to HPSEBL.

The HPERC has set the following tariffs:  ₹1.70 (~$0.024)/kWh for FY2019-2020, ₹2.17 (~$0.031)/kWh as the tariff for FY 2020-2021, ₹2.19 (~$0.032)/kWh for FY 2021-2022, ₹2.21 (~$0.0320)/kWh as the tariff for FY 2022-2023 and ₹2.23 (~$0.03)/kWh for FY 2023-2024.

Recently, the Central Electricity Regulatory Commission (CERC) settled a dispute regarding the revision of the tariff for the period between April 1, 2009 and March 31, 2014, including the truing up of the tariff, for a 1,500 MW (six units of 250 MW each) Nathpa Jhakri hydro-electric power project in Himachal Pradesh.

Large hydropower projects were back in the limelight in India, thanks to the recent notification by the Ministry of Power in which such projects were reclassified as renewables. The Cabinet Committee on Economic Affairs recently approved the reclassification, endorsing a slew of economic benefits and incentives for the sector.