Tribunal Orders Review of Proposed Tata, Adani Tariff Increaseby
Regulator asked to assess cost impact for Gujarat plants
Buyers challenged 2013 order awarding higher tariffs
An Indian electricity disputes tribunal ordered a reassessment of the impact of higher coal prices on two plants of Tata Power Co. and Adani Power Ltd., setting aside an earlier order from the federal power regulator to award them a tariff increase.
The Appellate Tribunal for Electricity accepted that an increase in coal prices because of new regulations in Indonesia was a “force majeure” event at a hearing Thursday. It asked the Central Electricity Regulatory Commission to allow higher tariffs for the two companies within three months, according to a judgement posted on the tribunal’s website.
The judgement was a “win” for the company and vindicated its stand, Tata Power’s Managing Director Anil Sardana told the ET Now television channel.
Tata and Adani, which both run plants in the western state of Gujarat, sought compensation after Indonesia promulgated a law in 2010 asking suppliers to link their contracts to a newly-created benchmark, raising prices. The two companies won a favorable order from the federal electricity regulator in 2013, which allowed them to charge a compensatory tariff to cover the additional costs. Some states buying the power challenged the regulator’s orders.
“The disappointment is that the tribunal didn’t award the compensatory tariff today,” analysts including Sumit Kishore at JP Morgan Chase & Co. said in a report Thursday. State power retailers may approach the nation’s highest court to overturn the order, he said.
Tata Power fell 3.9 percent, the most in almost two months, to 63.90 rupees at the close in Mumbai. Adani Power declined 2.9 percent to 33.20 rupees.