On 13th May 2022, the Central Electricity Regulatory Commission (CERC) issued a staff paper introducing a 'Methodology for Computing “Deterrent Charges” for maintaining lower coal stock by coal based thermal generating stations'. This was based on the disincentives suggested by the Central Electricity Authority (CEA) on 6th December 2021 while revising the coal stocking norms.

Given the recent and recurring coal crises, mechanisms to ensure sufficient coal stocks at TPPs to mitigate any risks owing to coal shortages are a step in the right direction. Toward ensuring this and offering clarity on some aspects of the suggested methodology, Prayas (Energy Group) had the following  suggestions: 

  • toward ensuring transparency and effective public participation, CEA's latest coal stocking norms and other related documents must be made publicly accessible, and the further steps taken with regard to this methodology must also be based on public consultations
  • the suggested methodology of calculating the deterrence charges are linked to the availability of the generating station, which will not deter the maintenance of lower coal stocks
  • an alternate mechanism linked to the compliance with coal stocking norms rather than availability is proposed, which also ensures that generators are penalised  for only their role in maintaining insufficient coal stocks
  • the implementation of the mechanism proposed (and the one suggested in the staff paper) is contingent on the availability of crucial data from generators
  • similar measures must also extend to Section 63 TPPs and TPPs under the jurisdiction of state ERCs.
  • suggestions on broader issues, such as ensuring prudence of coal imports and the terms of the recently revised coal stocking norms, were also mentioned