Adani Power Ltd a subsidiary of Adani Enterprises Ltd and part of India’s leading integrated infrastructure conglomerate the Adani Group, conferred with the prestigious National Energy Conservation Award for 2011 by the Bureau of Energy Efficiency, a part of the Central Electricity Authority, Ministry of Power. Mr Rajesh Adani MD of Adani Power upon receiving the award said that “We are honoured to receive this coveted recognition for our efforts in energy conservation. This is an excellent initiative by the Bureau of Energy Efficiency to motivate the Indian industry to use energy efficiently and promote a culture of conservation.” The company, which is India’s leading private thermal power producer, has been awarded the first prize in the Thermal Power Station category for its state-of-the-art super critical technology-based thermal power plant at Mundra, Gujarat Adani Power, which is operating 3,300 MW at Mundra including four units of 330 MW and three units of 660 MW, is in the process of commissioning two more units of 660 MW. With the final plant capacity of 4,620 MW, the Mundra plant will be the single largest thermal power plant in India. Some of the important energy saving parameters at the Mundra power plant are 9% percent reduction in electrical energy, 14% in auxiliary power consumption and 3% reduction in coal consumption .Power sector regulator CERC has said Adani Power BSE -0.84 % should be granted “compensation” package for its Mundra project which would provide a cushion against the escalation in cost of imported coal for the plant.The Central Electricity Regulatory Commission (CERC) ruled that the company will be allowed to temporarily increase tariffs to compensate for the additional fuel costs. It justified this action on the ground that the increase in fuel prices had made it unviable for Adani Power to supply electricity to consumers at the price to which it had committed itself while winning the competitive bid in 2007 for supplying electricity to Gujarat Urja Vikas Nigam Ltd (GUVNL) and in 2008 for supply to Haryana’s Uttar Haryana Bijli Vitran Nigam Ltd (UHBVNL) and Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVNL) utilities. The order, a majority verdict since one of the four members dissented, is significant as it opens the door to compensation for other power projects that have run into similar problems due to a seemingly unexpected turn of circumstances, especially with respect to fuel costs.  The dissenting member opined that the order set a bad precedent and compromised consumer interests by preparing the ground for an effective increase in tariffs as a means of compensating developers for unexpected and unplanned cost increases.  According to Adani Power, the additional cost for the Haryana and Gujarat tariffs on account of imported coal is 64 paise and Rs.1.11 per unit, respectively, in the first year of supply. According to a Gujarat Electricity Regulatory Commission official, who requested anonymity, for the hike of about Rs.1.11 per unit sought by Adani Power in Gujarat, consumers in the state will have to shell out around 20 paise more per unit. Adani Power had entered into two power purchase agreements of 1,000MW each with the Gujarat government at Rs.2.35 per unit, and Rs.2.89 per unit for its 4,620MW plant in Mundra. It entered into a similar accord with the Haryana government atRs.2.94 per unit for 1,424MW. The company approached CERC to consider increases in the power tariff after customers in Haryana and Gujarat declined to pay higher rates for the electricity generated from its imported coal-based plant in Gujarat. CERC called for a variable “compensatory tariff” akin to a compensation package to be offered to Gautam Adani-promoted Adani Power till the fuel situation stabilized. The judgement will also have a favourable bearing on other imported coal-based projects planned in the country such as those of Tata Power Co. Ltd and Reliance Power Ltd. The company had approached the Central Electricity Regulatory Commission (CERC) last year, seeking revision in tariff from its 1,980-MW Mundra project in Gujarat saying increase in imported fuel cost. CERC in its order has said that in order to offset increase in cost of imported coal, till the international price of the commodity is stabilised, the company should be provided with some relief.  ”In the present case, the escalation in price of imported coal on account of Indonesian Regulation and non-availability of adequate fuel linkage from Coal India for the project of the petitioner (Adani Power) is a temporary phenomenon and is likely to be stabilised after some time,” the order said.  ”Therefore, the petitioner needs to be compensated for the intervening period with a compensation package over and above the tariff discovered through the competitive bidding,” it added.  The compensation package will be called ‘compensatory tariff‘ and it could be variable in nature in proportion with the hardship that the company is suffering on account of the unforeseen events, it said. The Central Electricity Regulatory Commission (CERC) ruled that the company will be allowed to temporarily increase tariffs to compensate for the additional fuel costs. It justified this action on the ground that the increase in fuel prices had made it unviable for Adani Power to supply electricity to consumers at the price to which it had committed itself while winning the competitive bid in 2007 for supplying electricity to Gujarat Urja Vikas Nigam Ltd (GUVNL) and in 2008 for supply to Haryana’s Uttar Haryana Bijli Vitran Nigam Ltd (UHBVNL) and Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVNL) utilities. The order, a majority verdict since one of the four members dissented, is significant as it opens the door to compensation for other power projects that have run into similar problems due to a seemingly unexpected turn of circumstances, especially with respect to fuel costs. The dissenting member opined that the order set a bad precedent and compromised consumer interests by preparing the ground for an effective increase in tariffs as a means of compensating developers for unexpected and unplanned cost increases.  According to Adani Power, the additional cost for the Haryana and Gujarat tariffs on account of imported coal is 64 paise and Rs.1.11 per unit, respectively, in the first year of supply. According to a Gujarat Electricity Regulatory Commission official, who requested anonymity, for the hike of about Rs.1.11 per unit sought by Adani Power in Gujarat, consumers in the state will have to shell out around 20 paise more per unit. Adani Power had entered into two power purchase agreements of 1,000MW each with the Gujarat government at Rs.2.35 per unit, and Rs.2.89 per unit for its 4,620MW plant in Mundra. It entered into a similar accord with the Haryana government atRs.2.94 per unit for 1,424MW. The company approached CERC to consider increases in the power tariff after customers in Haryana and Gujarat declined to pay higher rates for the electricity generated from its imported coal-based plant in Gujarat. CERC called for a variable “compensatory tariff” akin to a compensation package to be offered to Gautam Adani-promoted Adani Power till the fuel situation stabilized. The judgement will also have a favourable bearing on other imported coal-based projects planned in the country such as those of Tata Power Co. Ltd and Reliance Power Ltd.