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Home News Power Sector News India has highest power tariff per unit in the world!

India has highest power tariff per unit in the world!

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Power crisisProlonged shortfalls in power supply throughout the country have led India to boast the highest cost per unit of electricity in the world. During the first half of the 11th five-year plan, the cost rose to Rs 5.9 per unit for the 59,000 crore units flowing through the sector’s various mechanisms for inter-state trading, according to a Planning Commission report.

With short supply causing the price of power to rise, those states with excess energy have made a profitable scheme out of the sale of power, while managing to keep their consumer tariffs low. Unfortunately, states with power deficits are dictating power exchange trends resulting in frequent unscheduled interchanges (UI).

Each day, regional load dispatch centres prepare for the next days’ power consumption by asking states to declare how much power they will be supplying to the grid and how much they will require. When states are unable to keep their word and end up withholding power from the grid or withdrawing excess energy, they pay an unscheduled interchange surcharge ranging from 12 paise per kilowatt hour (kWh) to 735 paise per kWh, depending on the fluctuation in frequency.

Along with supply shortfalls, these UI’s have caused massive inflation in rates, which are then passed on to consumers. And although these fluctuations in grid frequency draw additional financial burden on both the deficit and surplus states, approximately 41 per cent of the volume of power trading comes from UI.

Haryana, Rajasthan, Maharashtra, Punjab and Andhra Pradesh are the chief violators, bringing in 58.86 per cent of the power traded through UI. Their partners in crime: Chhatisgarh, Gujarat, Orissa, Delhi and Madhya Pradesh., comprised of 47.39 per cent of the UI supplied to the deficit states. “All the states that are supplying power, they’re making money and using it for development of other infrastructure,” said an official with the Indian Energy Exchange.

“Many states under-draw so they can earn that money,” said Promod Deo, chairman, central electricity regulatory commission (CERC). “We are trying to reduce it through regulation; UI should not be used at all.”

More than 48 per cent of power traded has come through bilateral exchanges while just under 11 per cent is exchanged on India’s two power exchanges.

Source- Indian Express

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