The Central Electricity Regulatory Commission (CERC) has proposed a hike in transmission charges by 1.35 times, which could hurt the growing market for spot or short-term transaction of power.
States and open access industrial consumers are increasingly shifting to short-term power purchase due to uncertainty in power demand. If approved, they might have to face increased charges, which would be similar to long-term power rates.
Lately, the central government has also been promoting the spot market, as increased competition reduces cost of power. While the tariff quoted in the long-term power purchase agreement has touched Rs 3.9-5.5 per unit in the past three years, the spot price has gone down to Rs 2.16 per unit during the same period.
While private players and some states have been active in the spot market, NTPC
has also started selling un-requisitioned surplus power at the exchanges.
The commission is of the view that increasing short-term transaction of power is leading to congestion in the grid and also affecting the transmission planning, which is typically for long-term transactions. It has come to this conclusion after submissions from the Central Transmission Utility
(CTU), also known as Power Grid Corporation of India.
The volume of short-term transactions has increased to 63.96 billion units (BUs) in 2014-15, from 24.69 BUs in 2008-09. However, the prices of electricity of short-term transactions has come down to Rs 2.5 per unit, from about Rs 7.29 per unit during 2008-09.
has expressed its concerns that generators may not apply for long-term agreement (LTA) and evacuate power under short-term open access (STOA) and/or medium-term open access (MTOA). “It is likely that there are less long-term power purchase agreements, leading to lack of LTAs and inefficient transmission planning,” said CERC
in its draft regulations, dated October 28, 2016.
The regulations were open for comments till November 25. “There are a number of petitions and applications before the commission, wherein the generators are relinquishing their LTA quantum but at the same time evacuating power under STOA/MTOA markets. This causes burden of higher transmission charges on other long-term customers. This scenario is likely to lead to under-building of transmission capacity thereby leading to instances of congestions,” CERC
observed in its detailed regulations.
The power sector, which has been hailing the shift to short-term or day-ahead power market, is opposing this sudden change. The industry is of the view that in the current scenario when discoms are trying to reduce power tariff in a bid to reduce losses, the short-term market creates competition and helps in decreasing power rates.