Electricity prices at power trading exchanges have dropped below Rs 1 for off-peak demand periods in areas with excess power generation. In some areas, prices have dipped to 50 paise per unit while at others it is hovering at around 80 paise per unit. Rates are about 20% down from last year.
This is due to the combined effect of less-than-anticipated demand growth, excess coal at thermal power plants and restrictions imposed by the National Load Despatch Centre on long-distance power transmission because of wintry conditions, according to India Energy Exchange executives. Consumers could see a reduction in their tariffs but not many utilities are taking advantage of the price drop.
"A large number of power utilities are not active in participating in power trading even when prices dip to such low levels," said a senior power sector official. "They seem to be happy buying power from the generators with which they have signed power purchase agreements even if the price at which they are buying the power is higher than exchange prices."
The recent trend suggests that prices have dipped for power generation in west and east India where there's surplus electricity. Prices in north India have dropped as well but have stayed at about Rs 1.9 per unit, the average level at the exchange. West is a power surplus zone and sells it to the north, where demand is always higher. However, a recent restriction on power transmission due to weather conditions have resulted in less power being pumped from west to north, leading to prices falling below Rs 1.
The National Load Despatch Centre has asked companies to restrict power transmission capacity to 9,000 mw instead of using the full 11,000 mw capability. NLDC's decision to restrict power flow was prompted by a breakdown of transmission lines connecting west and north a few days ago. In the cold weather, dust, mist and snow on the ceramic insulators lead to short circuits.