The Central Electricity Regulatory Commission (CERC) has released a notification outlining the annual escalation rates applicable for payments in Power Purchase Agreements (PPAs) entered into by distribution licensees for power procurement. These rates are effective for the period spanning from April 1, 2025, to September 30, 2025.
The notification is issued in accordance with the Ministry of Power’s guidelines on tariff determination through bidding for power procurement by distribution licensees (dated January 19, 2005, as amended) and the guidelines for tariff-based competitive bidding for Round-The-Clock (RTC) power from renewable energy projects complemented by coal-based thermal power projects (dated July 22, 2020, as amended).
The CERC has specified the following annual escalation rates for payment during the specified period:
| Description | Annual Escalation Rates for Payment (%) |
|---|---|
| Escalation rate for domestic coal | 0.00% |
| Escalation rate for domestic gas | 2.13% |
| Escalation rate for imported coal (Energy Charge Sub-component) | -11.22% |
| Escalation rate for transportation of imported coal (Energy Charge Sub-component) | -14.65% |
| Escalation rate for inland handling of imported coal (Energy Charge Sub-component) | 4.72% |
| Escalation rate for inland transportation charges for coal – Up to 100 Km distance | 0.00% |
| Escalation rate for inland transportation charges for coal – Up to 125 Km distance | 0.00% |
| Escalation rate for inland transportation charges for coal – Up to 500 Km distance | 0.00% |
| Escalation rate for inland transportation charges for coal – Up to 1000 Km distance | 0.00% |
| Escalation rate for inland transportation charges for coal – Up to 2000 Km distance | 0.00% |
| Escalation rate for inland transportation charges for coal – Beyond 2000 Km distance | 0.00% |
| Escalation rate for inland transportation charges for gas – Zone-1 (Up to 300 Km) | 10.20% |
| Escalation rate for inland transportation charges for gas – Zone-2 (300-1200 Km) | 2.73% |
| Escalation rate for inland transportation charges for gas – Zone-3 (above 1200 Km) | -13.53% |
| Escalation rate for imported gas (Energy Charge Sub-component) | 44.20% |
| Escalation rate for transportation of imported gas (Energy Charge Sub-component) | -14.65% |
| Escalation rate for inland handling of imported gas (Energy Charge Sub-component) | 4.72% |
| Inflation rate to be applied to indexed capacity charge component | 4.72% |
| Inflation rate to be applied to indexed energy charge component (captive fuel) | 0.77% |
These rates will be used to adjust payments made to power generators by distribution licensees based on the terms of their respective Power Purchase Agreements. The notification provides clarity on the applicable escalation factors for various fuel sources, transportation costs, and other components of the energy and capacity charges for the specified six-month period. This information is crucial for both power generators and distribution companies in their financial planning and transactions.
