Towards tariff policy for central power sector utilities (CPSUs)

Abstract

There can not be a tariff policy for Central Power Sector Utilities(CPSUs) that is market creating without a strategy for transmission access and pricing. Similarly, the policy has to be derived from a more general policy of bulk electricity pricing. Open access, with a three - part tariff for transmission and 'right structuirng' of the ownership of the transmission entity is to key to bulk electricity pricing. The important issue in bulk electricity pricing and more specifically in the pricing of CPSUs are brought out. Without a cogent policy of export and import of power, preferably via an agreed upon time schedule of transmission of current restrictions, and their subsequent reduction, locational risk would continue to be a very large. A strategy to replace the 'bulk purchase and sales agreement' with one that is in keeping with market development is bought out. Key to bringing about competition in generation is open access and a complete revamp of the current captive power policy. Market pricing, with half - hour slots for contract sales, stiff charges for unscheduled differences, rather than cost plus pricing is the key to efficiency and realisation of the systematic efficiencies of hydro stations.