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Peak power tariff surges in open market to ₹10.88/unit - Fallout of drop in hydel power supply, coal linkages to plants, say players

  • The average merchant power tariff has surged from ₹3.74 a unit to ₹6.99 a unit between August 19 and 26, according to the Indian Energy Exchange (IEX). Peak tariff moved up to ₹10.88/unit, a record in recent history. For more than a year, the electricity generation sector has been suffering from lukewarm demand and falling plant load factor. Barring the four southern States, suffering from grid constraints, round-the-clock average tariff in the North and Western region barely crossed ₹3.5 a unit, even in peak summer.

  • “I have never seen open market tariff moving so wildly, in the rainy season,” said a senior official of a generation outfit. “The tariff is so high that even imported fuel based plants can make handsome profits,” he added. What is striking though is he doesn’t have much clue about the reasons behind such volatility in tariff. NTPC sources claim that a sudden fall in hydro-electricity supplies, coupled with glitches in fuel supply to a number of company plants including Sipat, Korba Simhadri and Ramagundam have led to an increase in tariff.

  • However, sources in a major power exchange say, hydro-electricity supplies were down by 3,000 MW for only two days last week, as most facilities went on a de-silting exercise. Coal India sources confirmed that there was issue with supplies to NTPC’s Sipat unit from a dedicated mine in Korba earlier this month due to malfunction of a conveyor belt. But that has been resolved. Overall, its supplies to the power sector are significantly up this year, compared to last year. Not much disruption is recorded in the production side either. Despite heavy rains this season, in six out of the seven mining subsidiaries, August production is more or less on target.

  • NTPC sources also confirm an improvement in fuel scenario of late. The company, however, has grievances on low assured supply (65 per cent of requisite quantity) to new units. But that is an industry-wide phenomenon. Even thermal imports are up 20 per cent (10 mt) during April-July this year, confirms Viresh Oberoi, MD and CEO, mjunction services ltd. An analyst, who did not want to be named, said most of the generation utilities were not ready to meet such a sudden drop in supplies from the hydel sector. This, coupled with the generally subdued coal supplies due to rains, may have worked wonders.

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