Union Power Minister R K Singh on Thursday launched a portal to ensure greater availability of power during the peak demand season at a price higher than the ceiling of Rs 12 per unit by a certain category of sellers. The government has launched a High Price Day Ahead Market (HP-DAM) and Surplus Power Portal (PUShP), a power ministry statement said.
Ministry said this move rationalised the price for buyers. Because of the high prices of gas in the international market; the electricity made by using gas was expensive – more than Rs 12 per unit – and this capacity could not be sold on the market. Similarly, the imported coal-based plants and the Renewable Energy stored in battery-energy storage systems could not be brought into operation, as their generation cost was high.
This year it is expected that the demand will be much higher than last year therefore, the gas-based plants and the imported coal-based plants will need to be scheduled – and that is why a separate segment has been carved out for those generation systems where the cost of generating power – from gas, imported coal, or RE plus storage – may cross Rs 12, the ministry added.
After noting on some days the prices in the electricity exchange had gone up to Rs 20, the Ministry of Power last year had given directions to the CERC to put a price cap of Rs12 on the exchange so that there is no profiteering. The cap was imposed from April 1, 2022, in Day Ahead Market and Real-Time Market, and further in all segments from May 6, 2022.
According to a PTI report, earlier in February, power regulator CERC approved the HP-DAM segment where power can be sold at a price as high as Rs 50 per unit. In order to generate and sell expensive power to satisfy the high peak demand in summer, which is anticipated to reach 239 GW this season, HP-DAM will assist stranded gas and imported coal-based power plants.
The new segment will also ensure the availability of electricity through an expensive battery energy storage system.
Union Power Minister R K Singh said that the HP—DAM was part of the overall strategy to ensure that all available power capacity is utilized to supply the power to consumers.
Singh said that nobody would be allowed to charge exorbitant rates…only those generating capacities which have a cost of producing power of more than Rs 12 per unit would be allowed to operate in HP-DAM. If the cost of production is less than Rs 12, the generators will have to offer power in the Power Exchange’s Integrated Day Ahead Market (I-DAM) only with a ceiling price of Rs 12.
He also asked CEA and Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no power producers charge exorbitant prices, which are much than the cost of production.
RK Singh further added that India was a very stable power market as against the case in some developed countries where a situation of power tariff much higher than the cost of production was seen last year.
The power ministry also said distribution companies have tied up long-term PPAs for power supply. They have to pay fixed charges even when they do not schedule the power. Now the DISCOMs will be able to indicate their surplus power in block times /days/months on the portal. Those DISCOMs who need power will be able to requisition the surplus power.
It also added that the new buyer will pay both variable charges (VC) and fixed costs (FC) as determined by Regulators. Once power is reassigned, the original beneficiary shall have no right to recall as the entire FC liability is also shifted to the new beneficiary.
The financial liability of the new buyer shall be limited to the quantum of temporary allocated/transferred power. This will reduce the fixed cost burden on the DISCOMs, and will also enable all the available generation capacity to be utilized, the ministry added.