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| Delayed monsoon: CERC to cap price of traded power |
| BS Reporter / New Delhi Sep 12, 2009, 00:32 IST |
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In the wake of delayed monsoon, which has enhanced power shortages in the country, the Central Electricity Regulatory Commission (CERC) has decided to control the escalating price of power traded in the domestic market.
In its latest order, the apex power regulator has imposed a cap of Rs 8 per unit on the price of power traded bilaterally and at the two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL).
“It is noticed that on account of unforeseen bad monsoons and drought-like conditions, the prices and volatility have risen significantly. There is an urgent need to intervene and prescribe a cap on the maximum and minimum prices in the day-ahead market so as to protect the interest of consumers,” the commission has noted in the order.
Shortage of peak-time-power in the country is estimated to be as high as 18.1 per cent in the current fiscal against a 12 per cent deficit in the last financial year, according to the latest data obtained from the Central Electricity Authority (CEA). While the peak deficit for the western region has been forecast at 27 per cent, the shortfall for northern areas is estimated to be over 19 per cent.
The corrective move by the regulator has come as a strong reaction to the findings of the latest reports of its “market monitoring cell”, which indicated abnormally high prices of power sold during certain trading hours at the exchanges last month.
Power prices jumped 2.5 times to Rs 14.5 per unit between August 3 and August 13 at IEX. Similarly, price of power traded at PXIL, too, increased 3.2 times in the same period.
“Our main concern, apart from the high prices, is to control the price volatility. The prices touched even Rs 17 per unit some time last month,” said a senior official from CERC. Volatility in the price of traded power in India increased from 13 per cent on August 3 to 41 per cent on August 10.
The electricity regulator has the power, under sub-section 1 of section 62 of the Electricity Act of 2003, to fix the minimum and maximum ceiling of tariff for sale and purchase of electricity in the country “for a period not exceeding one year”.
The ceiling on power tariff at Rs 8 per unit will be applicable for 45 days, ending mid-October this year. CERC had convened a public hearing earlier this week inviting comments from stakeholders on the matter. The stakeholders opposed the commission’s move arguing that no instance of any market abuse or market domination has come to light, which could justify the commission’s intervention.
The regulator has, however, gone ahead with the cap, maintaining that its “mandate to develop and regulate power market is not constrained by the prerequisite of establishing abusive behaviour by a market player”.
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