The Power generation sector in India has transitioned from power deficit to a capacity surplus largely on account of significant capacity addition by Central sector generators and IPPs. Besides, the significant capacity push on the renewable side has landed the utilities in a power surplus position.

The contract structures in Indian context are largely cost plus for Central and State generators and competitive for most of the IPPs. The cost plus projects are prone to change in the regulations on a periodic basis which poses threat to cost recovery of fixed charges and pass through of actual fuel cost. Similarly, the plants operating under competitive bidding have to struggle before appropriate Regulatory commissions to get a pass through of any additional cost pursuant to Change in Law.

From the perspective of Regulatory Commission, only the prudent costs need to be allowed as a pass through and the policy and regulatory return should be commensurate with the changing/reduction in risks in the sector.

Mercados with its in-depth expertise in the sector, supports it clients by providing strategic advice on policy and regulatory interpretations and legal precedence while dealing with the issues.

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