CERC floats staff paper on methodology for calculating escalation rate of imported coal

The Central Electricity Regulatory Commission (CERC) has floated a staff paper on methodology for computingthe escalation rate for imported coal for payment on a monthly basis, which will be used by discoms to make payments to gencos for purchasing electricity.

This is in view of Ministry of Power (MoP)’s letter dated April 13, 2022, wherein it had communicated its decision on the requirement of notification of escalation rate for imported coal for payment on monthly basis.CERC has proposed that the escalation rates for different escalable sub-components for computing energy charge for plants based on imported coal will be notified on a monthly basis. These sub-components are escalation rates for imported coal, its transportation and its inland handling. The data on price and price indices presently used for computing escalation rates for imported coal on six-monthly basis can be used for monthly basis. It includes the Price/ Price Index of Australian Coal (Global Coal), South African Coal (API4 of Argus) and Indonesian Coal (ICI3 of Argus and Platts Index). On escalation rate for transportation of imported coal, the price of VLSFO at Singapore of Clarksons will be used. For calculating the escalation rate for inland handling, the wholesale price index (WPI) and consumer price index for industrial workers (CPI-IW) will be utilised. The commission has asked stakeholders to submit their comments and suggestions on the same by May 20, 2022.

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