Fall in generation zooms power prices on exchanges

A dip in the generation of power at the NTPC power plants and some of Andhra Pradesh’s projects due to technical problems coupled by a slump in coal supplies after the Telangana agitation led the day’s prices in the market to go up to Rs 5 per unit from Rs 2.75 per unit on power exchanges.

Industry sources on Wednesday said this trend was expected to continue for a while. This has, on the one hand, led to a mad rush for tying up of power by utilities; it has also affected the volumes on the power exchanges.

The Indian Energy Exchange (IEX) saw the daily volume having been reduced by about 20 per cent to 32 million units from over 40 million units. At the Power Exchange India (PXI), the daily volume has dipped to 2.9 million units from 6 to 7 million units.

Indian Energy Exchange MD & CEO Jayant Deo said the increase in prices could be attributed to forced outages in the plants — particularly in Korba, Singrouli and Vindhyachal. “More than 6000 Mw of central-sector power plants capacity is currently under forced outages. It has a direct bearing on short-term prices to such forced outages,” he told Business Standard.

“It’s all because of coal shortage, ash dam breakage or other avoidable circumstances. In the event of demand exceeding supply, the prices naturally move up.”

Currently, power exchanges are getting supply mainly from independent power producers and merchant power producers besides captive power plants. A few days ago, prices were significantly lower. There was sufficient supply available in the market, though there was no rise in demand even as many parts of the country were facing load-shedding.

On the other hand, Power Exchange India (PXI) official said a surge in buy bids at high prices has considerably pushed up the market clearing price on exchanges. “This has resulted in a mad rush of bidding of high prices by desparate buyers,” notes Deo. “That has further increased the market prices. The present situation is due to fall in power generation at the NTPC plants and at some power plants in Andhra Pradesh amid the Telangana agitation.”

Deo explained the present situation can be “best described as a reverse of California Power Crisis”. He noted that in California, USA distribution companies were not allowed to increase tariff, while the power purchase costs were going up. “This resulted in adverse financial impact on these distribution companies,” he noted.

This ultimately led to a total blackout in California, which is popularly known as California Power Crisis. “As against that, our country today has demand being artificially suppressed by continuous load-shedding.

This is resulting in suppressed prices. These low prices are resulting in poor financial condition of the private-sector generators. The possibility of defaults in loan repayment and the payment of interest by these generating companies are therefore, not totally ruled out,” he added.