Demand dip cools power prices to record low of 13p

Indian power market is witnessing interesting price trends. The power prices on the power exchange Indian Energy Exchange (IEX) touched a new low of 13 paisa/unit with average rate of Re 1/unit for the delivery day of June 2.

The maximum hourly price is Rs 2.1 per unit during two hours of the day, whereas in the evening peak hours from 5 pm to 10 pm maximum price is only Rs 1.9 per unit. This brings cheers for electricity consumers as state electricity boards or unbundled utilities will pass on relief to them.

Curiously, the second power exchange of the country, Power Exchange India (PXI), as per the data available on its website, could not trade single unit of power in last 13 out of 14 days.

The fall in electricity prices is attributed to availability of power after the commencement of K-G D6 gas supply, reduction in power demand due to changed weather conditions following lowering of temperature all across in North, East, North-East and South and release of some power from captive producers for sale in the open market.

Incidentally, due to the fall in demand, various states including Andhra Pradesh, Rajasthan and Tamil Nadu have stopped purchasing through the short-term power market. These states have preferred to terminate their bilateral contracts with the power sellers.

Industry sources told FE, "The present scenario is quite interesting. Till end of May, power market witnessed a peak prices of Rs 15 per unit, which was true reflection of high demand, desperation of buyers and shortage of sellers. The high electricity price was due to tight power market following rise in demand due to general elections, surge in temparatures and less availability of power, especially from captive power plants. However,

in June when the electricity price touches 13 paisa per unit, it shows the surplus availability of generation, which in turn shows strength of competitive markets. In April, nearly 376 million units of power were traded at IEX while in May it reduced to 323 MUs. This trend is expected to continue during monsoon season.

Andhra Pradesh, which was frantically buying local power in the range of Rs 6.50 to Rs 7, suddenly stopped all power purchases. Karnataka also modified its section 11 order asking generators to opt for 50 % open access. As reported by FE, Karnataka had issued order under section 11 of the Electricity Act, 2003 under "extraordinary circumstances" and had asked all power generators to generate power and sell it within the state to tide over the power deficit. However, with the ease in power situation, the Karnataka government has allowed generators to go in for 50% open access.

Further, Chhattisgarh captive power plants have backed down for want of market. Some of the states have continued usual power cuts despite availability of power at lower prices. The tripping of powergrid Ehv lines in Northern region due to bad weather and storms on May 10 and May 19 in Delhi, Haryana and UP has also added to the woes of northern region consumers. Since the transmission corridors are not available for import of power into the region, utilities are deprived of cheaper power. The transmission network is expected to be restored in next two weeks.

D Radhakrishnan, leading power consultant said, "This is a market correction price and utilities and generators would get a proper price in a time to come. Its a fact that generators were charging as high as Rs 10 per unit despite the cost of production is in the range of Rs 3.50 to Rs 4.50."

and#149;The Power Exchange India could not trade single unit of power in last 13 days

and#149;The fall in electricity prices is attributed to availability of power after commencement of K-G D6 gas supply

and#149;Release of some power from captive producers for sale in the open market also lead to fall in prices

and#149;Due to fall in demand various states have stopped purchasing via short-term power market