‘Plant availability’ is defined as the percentage of time over which a power plant or unit is available to generate power after accounting for auxiliary consumption. It is a key performance parameter which impacts the operation of the plant and affects associated costs. For cost-plus Thermal Power Plants (TPPs), Electricity Regulatory Commissions (ERCs) set the norm for plant availability. The fixed cost recovery of these plants is also linked to the availability norm. In this case study, we examine the regulatory treatment of this crucial performance parameter across six states — Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu — over the FY17 – FY22 period. 

The analysis shows that the framework as well as the implementation varies across the six states with varying degrees of regulatory accountability for TPP performance. The regulatory treatment of plant availability by ERCs in Maharashtra, Madhya Pradesh and Rajasthan follows principles that ensure accountability from generators towards achieving normative performance. While Gujarat adopts a similar framework, the fixed cost disallowance linked with availability is not discussed in its regulatory process, thus affecting the transparency of the availability treatment. The Tamil Nadu ERC calculates fixed cost disallowance in accordance with accountability frameworks, but does not reflect it in the generator’s revenue requirement. Chhattisgarh has an interlinked treatment of fixed cost disallowance which dilutes accountability towards generator performance. The different methodologies and regulatory treatment across the six states result in a variation in disallowance from 0% to 16.6% on the revenue recovery of the generator, when the actual availability is less than the norm. 

The treatment of availability has broader implications for power procurement strategies of distribution licensees, as well as for the implementation of other mandates such as Rule 9 of the Late Payment Surcharge Rules, 2022. 

This article was published as part of the Energy Transition Preparedness Initiative (ETPI) on 17th January 2025. Find out more about the research initiative at etpi.in