Power tariff adjustment sought as Guddu plant capacity drops

ISLAMABAD: The Central Power Generation Company Limited (CPGCL), a state-owned entity, has requested a tariff adjustment for its 747-megawatt Combined Cycle Guddu Power Plant (GENCO-II), following a drop-in capacity from 747MW to 483MW due to the unavailability of ST-16 turbine since July 2022’s fire incident.

The company seeks modification in capacity charge on a take-and-pay basis at Rs9.3034 per kWh, applicable when the plant operates at 50 percent capacity in open cycle mode since July 10, 2022.

This charge adjustment reflects the reduced capacity availability from 747MW to 483MW due to the unavailability of the ST-16 turbine. The National Electric Power Regulatory Authority (Nepra) has accepted the petition and announced a public hearing on September 19 to discuss tariff modifications.

This tariff revision request comes as the plant has encountered operational constraints that limit its full capacity utilization, necessitating a financial adjustment to maintain economic viability. The reduction to half-capacity operation highlights ongoing challenges within the power sector, including equipment reliability and fuel supply issues.

The tariff modification, if approved, will align its pricing structure with its current operational reality, affecting both the cost of electricity to consumers and the financial health of CPGCL. The company has also proposed a 15 percent internal rate of return (IRR), consistent with the 2017 tariff, contingent on approval from the Power Division.

Additional adjustments include heat rate corrections for partial loading, degradation, and startup costs for both steam and gas turbines, as per the latest data from the original equipment manufacturer (OEM) of GT-14 and GT-15. The Plant is using local gas through a dedicated pipeline from Kandhkot tehsil of Kashmore.

Nepra has outlined several key issues for consideration during the hearing, including the justification of the requested capacity charges, the 15 percent IRR, and the appropriateness of heat rate and startup cost adjustments.

The regulatory body will also assess the indefinite operation of the plant in open cycle mode and the suboptimal burning of gas since July 2022. The upcoming deliberations will play a crucial role in determining the financial and operational structure of the Guddu power plant’s tariff, impacting both the company’s bottom line and the cost to consumers.