CERC retains price cap of Rs 12 per unit in power exchanges

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The Central Electricity Regulatory Commission (CERC) has extended the Rs 12-per-unit price ceiling in all market segments of power exchanges till further orders, the regulatory body said in an order issued on December 28. This is the third time the power regulator has extended the price cap for the energy bourses.

In April, the CERC revised the ceiling on spot power from Rs 20 per unit to Rs 12 per unit which was applicable till June 30. The same cap was extended from July 1 to September 30, and later it was extended for the second time from October 1 to December 31.

A senior official from the power ministry said the price cap on power exchanges is not being changed because the regulator is working on a separate high-price market for trading imported coal and gas.

However, the CERC, in its order, cited five reasons for retaining the same price cap for all the energy exchanges in the country. “In day ahead market (DAM) on India Energy Exchange Ltd (IEX), the market clearing price (MCP) of Rs.12/kWh was discovered from 1800 hrs to 2000 hrs in October and November. In December (till 26 December 2022), the MCP of Rs.12/kWh has been observed from 1630 hrs to 1945 hrs, along with the morning peak from 0700 hrs to 0945 hrs. These peaks are anticipated to become steeper as cold wave conditions prevail in the Northern and Northwestern parts of India,” read the order issued by the regulator, a copy of which is with Moneycontrol.

It said that a steep increase has been observed in the last few days of December. The MCP of Rs 12/kWh was observed in 23 blocks on December 26. A similar trend has also been observed in the real-time market (RTM) on IEX, it added.

Even as the domestic coal stock level from October to December remained well positioned as compared to the same period last year, the pressure on thermal power plants is going to remain high due to low generation from hydro and wind segments. “Generation from hydro and wind has come down from October onwards, which is likely to exert pressure on existing thermal stocks to meet the energy requirements,” the CERC said.

The CERC stated in its order that the peak power demand of India has been fluctuating and reached 187 GW in October and November 2022. In December 2022, it increased further and touched 200 GW on December 23.

As per the ‘Report on Twentieth Electric Power Survey of India’ published by the CEA in November 2022, the all-India peak electricity demand for the year 2023-24 is projected to be around 230 GW, it stated.

“Based on the analysis of month-wise data for the past few years, it is observed that both energy requirement and peak demand remained higher in 2022-23 and the trend is likely to continue in the coming months mainly due to lighting and heating load and increase in industrial activity,” the order read.