Spike in power rates: Temporary respite for JSW Energy

The spike in merchant tariffs in September are seasonal and may be short-lived

Rising merchant or short-term tariffs have come as a breather for JSW Energy, which has been reeling under lack of sufficient long-term power purchase agreements (PPAs). But the gains, which led to a rally in share price in the past one month, might be temporary.

In the past four to five quarters, a weak merchant demand in Karnataka and Maharashtra, lower tariff rates, inadequate long-term PPAs for its Vijaynagar plant and rising international coal prices have hurt its profits. So, higher spot market prices at over Rs 5/kWh compared with Rs 2.4/kWh in FY17 and at Rs 3/kWh for the