National Thermal Power Corp. (NTPC) stock fell the most on Tuesday after Central Electricity Regulatory Commission (CERC) issued draft regulations for the tariff period from 1-4-2014 to 31-3-2019 late on Monday.
The regulations will decide power tariff for power generating and transmission firms for the said period and are likely to affect the earnings of these firms.
The NTPC stock closed 11.26 per cent lower on the BSE. Stock of Tata Power and Torrent Power fell 1.52 per cent and
4.83 per cent, respectively. The NTPC stock was the top loser on the NSE falling 11.70 per cent.
Weakness was seen in other power related stocks, including National Hydroelectric Power Corp (NHPC) ended 1.37 per cent lower, Power Grid stock slipped 3.05 per cent and SJVN was down 2.88 per cent on the BSE.
"We see huge negative impact for NTPC. However, we see lower impact for PGCIL, NHPC and SJVN," brokerage firm Emkay Global said in a report.
"The final regulations could be different from the draft as has happened in the past. However, given the quantum of negative impact is high compared to previous draft regulations even if the norms are relaxed a bit it would still be negative," the report added.
Analysts say the guidelines tightened some operational parameters, reducing the use of financial incentives for achieving transmission and generation targets.
The guidelines also propose that some of the savings from fuel costs be partially passed on to consumers.
Analysts warn the proposals could hit returns for the companies. The rules need to be finalised by March.
Responding to draft proposals of the electricity regulator, NTPC said the company's generation incentives should be linked to the actual power produced instead of supply.
The draft guidelines of the Central Electricity Regulatory Commission (CERC) have proposed that the incentives given to the thermal power projects should be linked to the PLF (plant load factor) of the plant and not PAF (plant availability factor).
"The PAF is the declared capacity or the total generation capacity of the plant, whereas PLF is the actual generation which is based on the demand," NTPC Chairman and Managing Director Arup Roy Choudhury said.
The PLF may vary depending on the demand from the electricity distribution utilities but the actual generation capability or PAF remains the same.
He said "the PAF is generally higher than the PLF of the plant, therefore our incentives should not be linked to PLF."
The company has said that it will respond to the draft regulations by the CERC.
"This is a draft, the final guidelines will come around January after seeking comments from all the stakeholders and we are hopeful that the commission will not dis-incentivise or de-motivate the country's largest power generating firm," Choudhury said.
Revision of tariff regulations is reviewed every 5 years by CERC. The existing regulations (2009-14) will expire on March 31, 2014 and the revision of guidelines for 2014-19 is underway.
The firm's stock crashed 11.9 per cent to Rs 135 in intra-day trade and finally ended 11.26 per cent down at Rs 136 on the BSE. At the NSE, NTPC's stock dipped 11.37 per cent to close at Rs 136.
-With agency inputs
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