In a recent order, the Karnataka Electricity Regulatory Commission (KERC) has extended the validity of the generic tariff it had set for municipal solid waste (MSW) projects in the state. A tariff of Rs 7.08 per kWh was set by the commission back in 2016 which was applicable on all of the state’s MSW-based power projects, commissioned between September 19, 2016, to March 31, 2018.
This extension came after the commission reviewed a petition by the Bangalore Municipal Solid Waste Limited (BMSWL) which had requested for the extension of the tariff order for its project.
The commission, in turn, had noted that since no other waste to energy projects were established in Karnataka until then, there would be no significant changes in the parameters considered for fixing the tariff. Considering this, the KERC added that there’s no point in initiating the procedure for determining the tariff of waste-to-energy (WtE) projects. Consequently, the commission considered it necessary to extend the tariff order for a year from April 1, 2018, up to March 31, 2019.
Considering the present market rates and the Central Electricity Regulatory Commission (CERC) regulations, the commission had issued a paper in March 2019, seeking the suggestions and views from the stakeholders. After proposing a tariff of Rs 5.65 per kWh, the commission held a public hearing in which the Bangalore Electricity Supply Company (BESCOM) proposed to reduce the parameters such as the capital cost, interest on loan, interest on working capital, expenses, depreciation, in order to come to a lower tariff.
Meanwhile, the KPCL requested the commission to retain the existing tariff of Rs 7.08 per kWh, saying that it had already taken up a 5 MW WtE project at Bidadi. The KPCL further mentioned that any reduction in the existing tariff would adversely affect the project.
Following this, the Commission re-examined the issue and said that though the tariff of Rs 7.08/kWh was fixed in 2016, no waste to energy projects have been initiated in the state except this one, and therefore it felt that the reduction in the existing tariff might not attract new project developers in the state. Therefore, to encourage new waste to energy projects in Karnataka, the commission decided to retain the existing tariff for a period of one year beginning from April 1, 2019, to March 3, 2020.