States allege power cos profiteering, sell bids on PX drop 70%

Power companies are profiteering by overcharging for supply through direct negotiations by evading sale on power exchanges since prices were capped this month at Rs 12 per unit by the electricity regulator, states have informed the power ministry and the Central Electricity Regulatory Commission (CERC).

The power tariff and availability situation is closely being monitored by the Union power ministry and the CERC and if required, ‘suitable interventions could be taken,’ highly placed sources said.

CERC’s last such intervention in September 2009 was applicable on both power exchanges and bilateral contracts, which normally fall under the purview of state electricity regulators. Power plants, however, said the tariff capping in exchanges defeats the idea of a free market.

States like West Bengal, Telengana and Andhra Pradesh have said power is not available to them in power exchanges even at Rs 12 per unit as sell bids have fallen by a sharp 70% since April 2, since when the ceiling was introduced, the sources said.

Industry associations said the ceiling on prices has distorted the power market and the ceiling should either be applicable on all contracts including bilateral contracts or not at all be implemented. Power generators on the other hand opposed a cap saying there was no profiteering as the fuel costs and freight costs have significantly increased.

“It appears that the sellers have opted to supply power under TAM (term-ahead market) contracts for which Price Cap Order and Ceiling Price does not apply. Sellers are circumventing the order dated 01.04.2022 by entering into negotiations and then conducting their transaction under TAM contracts. This is being done with a view to bypass regulatory measures put in place by this Hon’ble Commission. This is having a huge impact on supply of power and is impacting the consumers,” West Bengal electricity distribution company has written to CERC.

Most southern states have conveyed their concerns in discussions with top government and CERC officials, the sources said.

After a direction from the Union power ministry under section 107 of Electricity Act, CERC lowered the price cap on the day-ahead and real term market to Rs 12 from Rs 20 a unit.

Data available with the country’s largest power bourse Indian Energy Exchange (IEX) said power plants are avoiding sale on day-ahead market, the most preferred market for spot purchases, and moved to term-ahead markets or signing bilateral contracts that are offering Rs 14-15 per unit. The term-ahead contract prices have moved from Rs 5 to Rs 13 per unit since April 2.

The prices on DAM and real time market (RTM) segments are at Rs 12 per unit for all time blocks. On the Centre’s DEEP platform for signing bilateral power contracts, Punjab bought power at Rs 15 per unit, Rajasthan and Delhi at Rs 12/unit. Apart from these short-term purchases on the portal, a lot of desperate states are buying power through bilateral contracts.


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