OPG Power gets boost from energy regulator

OPG Power Ventures has announced that Indian energy regulator, Tamil Nadu Electricity Regulatory Commission, has sanctioned an increase in regulated tariffs with immediate effect, which OPG believes will boost its own earnings.

Chief Executive Arvind Gupta said: "Recent federal budget pronouncements that reduce counter-veiling duty on imported coal from 5% to 1% and eliminate customs levies altogether for two years are expected to favourably [have an] impact [on] our fuel costs in 2012-13. More importantly, in our view these changes reinforce the intent of policymakers at various levels to support the sector. With 113 MW [megawatts] in generation and over 300 MW in new capacity to be rolled out over the next couple of years in Tamil Nadu alone, we look forward to the company benefiting significantly from these changes over the medium term.

"The tariff changes are the first such updates in several years in response to a clearly unsustainable position for the TNEB [Tamil Nadu Electricity Board]. The tariff increases and the adoption of a quarterly fuel surcharge represent a structural shift in the pricing environment. The regulator has signalled an intention to improve the financial health of TNEB and to provide an environment conducive to investment in the power sector."

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Key features of the order include an increase in regulated tariffs for virtually every category of consumer, which is expected to raise Tamil's revenues by 37% and reduce its projected deficit. In addition, there will be tariffs for high tension industrial users have effectively increased by INR 1.55 per kilowhatt hour (Kwh) or 34.5%, and an increase in transmission & wheeling charges of INR 0.32 per Kwh.