In what seems to be the first instance of such a demand, the state government wants the cess as compensation for environmental losses due to generation and allied activities.
The proposal has foxed the Central Electricity Authority and the state's power generation companies.
Orissa has a total installed power generation capacity of 7,000 Mw. Of this, the state's power generation utilities contribute 2,320 Mw and the central public sector unit National Thermal Power Corporation's power plant at Talcher contributes 3,000 Mw.
"The bulk of the power generated in the state is not utilised within it. A substantial chunk of it is sold to Karnataka and Maharashtra," a power sector official said.
Earlier, the Orissa government had asked for 12 per cent free power from the proposed 4,000 Mw ultra mega power plant in the state. It later dropped this demand.