ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Setting Risk-Based Returns in Power Sector

This paper attempts to provide a methodology for determining fair returns for a utility based on the risks associated with the particular segment of the sector it operates in. The analysis comes up with a conclusion that makes intuitive sense: that the distribution segment is the riskiest. The central transmission and generation entities operate under long-term contractual arrangements and have been given the highest form of payment guarantee by the Reserve Bank of India (RBI) in the form of access to state finances in case of defaults by SEBs, operate under the least risk. The paper attempts to emphasise the determination of return on equity based on a comprehensive risk evaluation matrix for each entity in the value chain and not a uniform return for the entire power sector.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top