The Ministry of Power vide notification dated 11th July, 2022 amended the Guidelines for long term Procurement of Electricity from Thermal Power Stations set up on Design, Build, Finance, Own and Operate (DBFOO) basis and sourcing fuel as provided under SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India) Policy.
The amendment provides that Central Electricity Regulatory Commission shall notify the escalation rates, on a monthly basis, for computation of fuel charges under Model Power Supply Agreement DBFOO.
Fuel Charge under Model Power Supply Agreement DBFOO is the amount payable by the Utility to the Supplier for the fuel utilized in generation of electricity. Since the risk of variation in fuel price cannot normally be managed by the Supplier, it must be passed on to the Utility, which, in turn, will have to reflect it in the distribution tariff. As per the amended guidelines escalation rates shall be determined by Central Electricity Regulatory Commission.
