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Home News Power Sector News Tamil Nadu urges Centre to fix cap on traded power through exchanges

Tamil Nadu urges Centre to fix cap on traded power through exchanges

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TNEBWeighed down by the financial burden of purchasing expensive electricity from private producers, government utilities and traders to manage the unprecedented power crisis, the Tamil Nadu government has asked the Centre to fix a cap on traded power to prevent profiteering by suppliers. Although central Government had touted power exchanges to induce competition, this was never happened as Indian energy market is facing acute power shortage.

A senior official of TNEB lamented that the selling price was not related to the cost of production and that sellers were quoting the maximum rate. "If the centre was able to fix a price cap on NLC and NTPC, why not on others?' the official asked.
With the cost of traded power having gone up steeply to Rs 10 per unit from Rs 2.10 in 2003-04, the TNEB sources said chief minister M Karunanidhi has taken up the issue with Prime Minister Manmohan Singh. TNEB has even bought power at an all-time high of Rs 11.86 per unit, and between April and November this year it had incurred an expenditure of nearly Rs 600 crore.

Due to shortage of power, there is a tendency on the part of sellers, private power producers, state utilities or traders operating on their own or through the power exchange, to hike prices to derive maximum returns, the chief minister has pointed out. Stressing the need for urgent intervention by the power ministry to prevent profiteering in sale of energy at the expense of state utilities and consumers, Karunanidhi maintained that he was not against power producers making reasonable profit.

He also asked the Centre to consider electricity as an essential public good and that it therefore required immediate regulation to prevent profiteering in sale of power. In the absence of appropriate regulation, public utilities in power-deficit states in the country would be pushed to extreme financial hardship, he has written.

TN purchases around 2,500 MW to bridge the demand-supply gap. Of this, 2,000 MW is bought from state-run utilities such as National Thermal Power Corp (NTPC) and Neyveli Lignite Corp (NLC) at a pre-determined rate in the region of Rs 4 per unit. The balance has to be bought on a daily basis through power exchanges as well as trading organisations like the Power Trading Corporation (PTC). The daily purchase is conducted through bids which see participation by various states facing a shortage. They depend on states with excess supply or private producers. But the cost of traded power often crosses Rs 10 per unit, which creates a huge burden on the TN electricity board (TNEB).


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