rk singh: govt to order CERC to cap future term market on power swaps: RK Singh

The government will invoke section 107 of the Electricity Act to order the electricity regulator to lower the ceiling on power prices on the forward power exchange market, energy minister RK Singh said.

The order will be given for the second time in a month, as the first directive was issued on March 26 limiting day-ahead and real-term market prices to Rs12/unit from Rs20/unit. With the order, all energy exchange segments will be capped.

“We will issue the order tomorrow,” Singh said Thursday. The country’s electricity demand hit a high of 204 Gw on the day, surpassing the previous high of 201 Gw on Wednesday.

Singh said that the high demand for electricity shows the rapid rebound of the Indian economy after two years of Covid. “This is very good news for all of us. Of course it is a challenge for the Ministries of Energy, Coal and Railways”, he said.

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The decision to invoke the section, used in extraordinary circumstances, comes amid complaints from states and industry that power companies are profiting from overcharging for supply through direct negotiations by avoiding selling on the pockets of energy from limitation. ET on Thursday reported

West Bengal, in its communication to the Central Electricity Regulatory Commission (CERC), sought capping of prices in the futures market. Prices for forward contracts have risen from Rs 5 to Rs 13 per unit since April 2.

However, the industry remained divided on the effectiveness of the cap, saying it gives power plants the opportunity to negotiate prices in two-sided markets with desperate buyers. “The existence of a free market is important as the discovered price acts as a reference point,” said an industry executive on condition of anonymity. Another executive said the government should limit all short-term markets, including bilateral transactions, or none at all.

States such as West Bengal, Telengana and Andhra Pradesh have said power is not available to them on power exchanges, even at Rs 12 per unit, as offers for sale have fallen 70% since April 2, since that the roof was introduced, the sources said. .

Power swaps make up 54% of short-term electricity trading. The trade in both exchanges in 11 months of fiscal year 22 was 100 UB and the contribution of the exchanges in the total generation of electricity is 7.5%.

The CERC is closely monitoring the tariff situation and power availability and, if necessary, “appropriate interventions could be taken,” ET reported on Thursday.

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