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Power defaulters need to watch out

The CERC will soon begin a major process to force the power defaulters to cough up the money, reports M Rajendran.

business Updated: May 06, 2007 19:51 IST

Power defaulters, big and small, need to watch out. The Central Electricity Regulatory Commission (CERC), exasperated with the continuing shortfall in the payment of dues by power consumers, will soon begin a major process to force them to cough up the money.

"The measures taken by the Central Undertakings to realise dues from the state electricity boards (SEBs) were many a time frustrated by various socio-political factors and technical limitations," says a paper to be made public by CERC on Monday.

One area of serious concern, the paper notes, is that of states defaulting in the payment of Unscheduled Interchange (UI) charges and Reactive Energy charges which they are required to do to the regional pool accounts. These accounts are operated by the regional load dispatch centres (RLDCs) on behalf of the respective Regional Power Committees.

Even when the power supply schedule for an SEB is curtailed as a punitive measure, there is no mechanism in place to prevent it from drawing extra power from the regional grid. It can still overdraw, with the reduced schedule as the new datum, and thus make up for the deficit.

Such additional drawing of power will now be accounted for as UI, for which the SEB must pay into the regional UI account.

"There has to be some compulsion to pay the UI charges," said a senior CERC official. "Thus henceforth the payment security mechanism (PSM) is no longer required for the generating companies, but they are now required for the UI charges. The payment security mechanism would need to be strong enough to have a hold on the SEBs. This aspect has been incorporated in the paper."

The paper also notes that the 'tripartite agreements', under which the SEBs' outstanding liabilities were securitised through state government bonds guaranteed by the Reserve Bank, did not cover payment of dues to private companies which have also entered into generation and transmission.