National Power Tariff policy to help deficit states

New tariff policy enables power generators to sell non-required power in spot market

India Energy Exchange (IEX) and Power Exchange India Ltd (PXIL), both currently have a mere 3% market share, hope to increase it further following approval to the national tariff policy.

The new tariff policy allows sell of PPA (power purchase agreement) tied, non-required power in the spot market, with two days notice.

IEX's daily turn over is 100 million units while PXIL's 1 and 3 million units.

PXIL MD & CEO M G Raoot told Business Standard, "We understand the amendments also provide an avenue for un-requisitioned power to be sold on the power exchange. We expect many state gencos to utilise this provision to sell un-requisitioned power in the day ahead and intra-day market in the near future and in turn optimally utilise the generating assets of the state."

He said the surpluses of various states would be traded to meet contingent requirement of deficit states under 'one nation-one grid' system.

On the move to exempt interstate transmission of solar and wind power from payment of inter-state transmission charges and losses, Raoot said this is expected to invigorate inter state trading of renewable power.

Rajesh Mediratta, IEX director (business development) said tariff policy changes will be positive for exchanges since generators will have another option to sell power in the spot market if in case discom is not requisitioning that.

"Though most of discoms now are anyway buying power from NTPC and other generators, discoms are not exploiting all opportunities that they have.Tariff policy is not binding which needs to be implemented through amendment to the Electricity Act, 2003," he added.

Maharashtra Electricity Regulatory Commission's former member Jayant Deo said it is pertinent to note several million units of power is not getting sold in spot market for want of buyers for many years.

"Many of the States like Maharashtra are not allowing Open Access to spot markets and / or applying prohibitive charges and conditions for competitive power. If Government wants to give intended benefits to society at large and to the economy, there is a need to correct the ground reality," Deo added.

Deo opined that in view of reserving cheaper power for BPL and agricultural consumers, the last defence for continued monopoly is removed.

"It is possible to implement new tariff policy from FY 2016-17. The Union Ministry of Power through Forum of Regulators can ensue this. If required APTEL (Appellate Tribunal for Electricity) can invoke enabling section 121 of the Electricity Act ,2003 for directing state electricity regulatory commission for bringing unfettered competition - the very basic fabric of the Electricity Act 2003, 'he noted.

According to Deo, the electricity market is well established where 15 minutes auction based prices are discovered one day in advance. This dynamic pricing ensures optimum resources use, thereby making Indian Industry to compete globally.