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The Central Electricity Regulatory Commission (CERC) on Thursday extended the ceiling of Rs 12 per unit in all market segments of power exchanges by three months till December 31, 2022.
CERC’s earlier order of lowering the price cap to Rs 12 per unit from Rs 20 per unit was in force till September 30. CERC has issued an order to extend the price cap of Rs 12 per unit in all market segments of power exchanges citing, the “Emerging demand-supply situation in the power sector.” As per CERC, it is expected that despite the fall in temperature, high demand for electricity, especially, from household and industrial consumers over the next few months, mainly due to the festive season and pressure emanating from lighting and heating load. Moreover, the agricultural load will persist over the next few months on account of the harvesting of Kharif crops and the sowing of winter crops. CERC’s move aims at curbing alleged profiteering by sellers, including distribution companies (Discoms).
Domestic coal stock seems to be well positioned as compared to last year’s period from October to December. “However, as per the past trend, it is expected that generation from hydro and wind would start decreasing from October onwards, which is likely to exert pressure on coal stock,” said CERC in its order.
“The Commission hereby directs all the operational Power Exchanges that starting 1st October 2022 till 31st December 2022, they shall continue to operate their software in such a way that members can quote a price in the range of Rs 0 per unit to Rs 12 per unit in Day Ahead Market (DAM) (including Green DAM), Real-Time Market (RTM), Intra-day, Day Ahead Contingency and Term Ahead (including Green Term Ahead) contracts,” said CERC.
According to the CERC, it has reviewed the situation in the power market and other related factors having an impact on the demand and supply of electricity. Based on the data provided by the Power Exchanges, POSOCO and as available on the website of the Central Electricity Authority.
“The peak demand has been fluctuating and touched 199 GW on September 7. Based on the past trend, it is expected that the peak demand (morning & evening peaks) would remain significant due to lighting and heating load in the winter months. During the last 3 months, Market Clearing Price (MCP) of Rs12 per unit in DAM has generally been discovered during the evening hours from 18:30 hrs onwards,” it observed.
The CERC in its order issued in May on the price ceiling of Rs 12 per unit, had said that analysis revealed the energy charge of the marginal generator to be in the range of around Rs 9 per unit.
In addition, if the expectation of recovery of part of the fixed cost and transmission charge are factored in, the ceiling price of Rs 12 per unit seems reasonable. The regulator after a review of the market activities took a stern view on the “alleged profiteering” by sellers including some Discoms.
View the Commission Order: