All India Power Engineers Federation (AIPEF) urged Prime Minister Narendra Modi that the burden of new emission norms for thermal power stations should not be passed on to the common consumers by tariff hike. The Federation also demanded for CAG audit of all independent power producers to check the actual expenditure on implementing the new emission norms.

Chairman of the AIPEF  Shailendra Dubey said that the Centre and the State Governments should bear the expenditure on new emission norms and it should not be passed on to power consumers. 

The Federation questioned the assessment of Information and Credit Rating Agency of India (ICRA) regarding hike of power generation cost by 13 to 22 paisa per unit and asked the Union Ministry of Power to clarify it stand by giving details of the cost to be incurred in implementing new emission norms.

Dubey said that as per the ICRA, thermal power companies would spend around `1.2 lakh crore to conform to the new norms over the next 2-3 years. Thermal power producers are free to pass on the cost of conformation to standards to consumers who would see power costs go up between 13 and 22 paisa per unit.

The revised emission norms notified by Ministry of Environment and Forests for thermal power projects are likely to impact 187 Giga watt of operational coal-based capacity and 74 GW of under-development capacity.

As per ICRA’s estimates, these norms would entail a capital investment of `60 lakh to `1 crore per MW, based on the age of the plant. This amounts to an aggregate capital

expenditure requirement of about `1.2 lakh crore. This is likely to result in an increase in the cost of generation of such plants by about 13-22 paisa per unit.

The Environment Ministry had in December 2015, notified revised emission norms for Thermal power plants with the objective of minimising emission of particulate matter, sulphur dioxide, oxides of nitrogen and mercury and also reduce water consumption.

The existing thermal power plants are required to follow revised standards within two years from the date of publication of the notification in December 2015. However, new plants starting their operations from January 2017 are required to comply with these norms from the commissioned date.

Dubey said that power generating companies are likely to be able to pass on the higher cost of generation to the off-takers, primarily state-owned distribution utilities under the ‘change in law’ mechanism in the power purchase agreement.

This would put an upward pressure on retail tariffs, which could be seen in the 2019 fiscal, assuming that the generating companies implement the revised norms over the next two years.