Power tariffs need to be flexible, to take into account real costs

Attorney General Goolam Vahanvati has opined that competitively-bid power tariffs can be reviewed and revised in the event of an unforeseen increase in input costs. This forward-looking stance makes eminent sense. Several power producers, including Tata, Reliance and Adani, are seeking tariff hikes to compensate for the steep rise in imported coal prices due to regulatory changes in Indonesia and Australia, besides depreciation of the rupee. To simply disallow tariff revision, the position reportedly taken by the concerned state regulators and distribution companies (discoms), would be to render unviable upcoming 12,000 MW of generation capacity based on imported coal.

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