Centre launches High Price Day Ahead Market and Surplus Power Portal, PUShP

With the prices in the electricity exchange going up to Rs20 last year, the ministry of power had given directions to the CERC to put a price cap of Rs12 on the exchange, so that there is no profiteering.  The cap was imposed from 1 April 2022 in Day Ahead Market & Real Time Market, and further in all segments from 6 May 2022. This move rationalised the price for buyers. 

However, because of the high prices of gas in the international market, the electricity made using gas was expensive – more than Rs12 per unit – and this capacity could not be sold on the market. Similarly, the plants based on imported coal and the renewable energy stored in battery 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 hence 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 Rs12.  This separate segment is called HP DAM.

Speaking on the occasion, the power minister said that the HP DAM was part of the overall strategy to ensure that all available power capacity is utilised for supply to power consumers. Explaining the operation of the HP-DAM, Singh said that nobody would be allowed to charge exorbitant rates. He said that only those generating capacities which have cost of producing power of more than Rs12 per unit would be allowed to operate in HP-DAM.  If the cost of production is less than Rs12, the generators will have to offer power in the Power Exchange’s Integrated Day Ahead Market (I-DAM) only with a ceiling price of Rs12. 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 producer charges exorbitant prices, which are much higher 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.

Speaking on the occasion, minister of state for power and heavy industries, Krishan Pal Gurjar expressed confidence that the new mechanism will ensure adequate availability of power. Power secretary Alok Kumar, while citing many benefits of the new market mechanism, clarified that as against some reports, Rs50 unit was only a technical cap and the market forces would ensure a much lower rate.

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, according to a power ministry release.