Tatsat Chronicle Magazine

Govt Launches High Price And Surplus Power Portal For Greater Power Availability

March 10, 2023

Government has launched a High Price Day Ahead Market and Surplus Power Portal (PUShP) – an initiative to ensure greater availability of power during the peak demand season. The move comes after consultation with various stake holders.

The portal was launched at a virtual function by Union Power & NRE Minister R.K. Singh in presence of over 200 stakeholders from state governments and the power sector.

Last year the Ministry of Power after taking note of the fact that on some days the prices in the electricity exchange had gone upto ₹20, had given directions to the CERC to put a price cap of Rs.12 on the exchange, so that there is no profiteering.

The cap was imposed from April 1, 2022 in Day Ahead Market & Real Time Market, and further in all segments from May 5, 2022.

This move rationalised the price for buyers.  Because of the high prices of gas in the international market; the electricity made by using gas was expensive – more than ₹12 per unit – and this capacity could not be sold on the market.  Similarly, the imported coal-based plants and the Renewable Energy stored in battery-energy storage systems could not be brought into operation, as their generation cost was high.

This year it is expected that the demand will be much higher than last year therefore, the gas-based plants and the imported coal-based plants will need to be scheduled – and that is why a separate segment has been carved out for those generation systems where the cost of generating power – from gas / imported coal / RE plus storage – may cross ₹12.  This separate segment is called HP DAM.

Speaking on the occasion Singh said that the HP—DAM was part of the overall strategy to ensure that all available power capacity is utilised for supply the power to consumers.

Explaining the operation of the HP-DAM, Singh said that nobody would be allowed to charge exorbitant rates and that only those generating capacities which have cost of producing power of more than Rs. 12 per unit would be allowed to operate in HP-DAM.

If the cost of production is less than Rs.12, the generators will have to offer power in the Power Exchange’s Integrated Day Ahead Market (I-DAM) only with a ceiling price of Rs.12. He asked CEA and Grid Controller to ensure that prices are reasonable in the HP-DAM and take necessary action to ensure that no Power Producers charges exorbitant prices, which are much than the cost of production.

Singh added that India was a very stable power market as against the case in some developed countries where a situation of power tariff much higher than the cost of production was seen last year.

Krishan Pal Gurjar, Minister of State of Power and Heavy Industries said that unlike the situation earlier, nobody could now imagine life without power. He expressed confidence that the new mechanism will ensure adequate availability of power.

Alok Kumar, Secretary, while citing many benefits of the new market mechanism, clarified that as against some reports, Rs. 50/- unit was only a technical cap and the market forces would ensure a much lower rate.

The surplus power portal is a one-of-its-kind initiative, reflecting the ingenuity of the Ministry of Power and the Regulator. Distribution Companies have tied up long term PPAs for power supply. They have to pay fixed charges even when they do not schedule the power.  Now the DISCOMs will be able to indicate their surplus power in block times / days / months on portal.

Those DISCOMs who need power will be able to requisition the surplus power.  The new buyer will pay both variable charge (VC) and fixed cost (FC) as determined by Regulators. Once power is reassigned, the original beneficiary shall have no right to recall as entire FC liability is also shifted to the new beneficiary. Financial liability of new buyer shall be limited to quantum of temporary allocated / transferred power.  This will reduce the fixed cost burden on the DISCOMs, and will also enable all the available generation capacity to be utilized.