Power Producers Told To Offer Unsold Long-Term Capacities Daily On Exchanges

The Ministry of Power has ordered that if distribution companies fail to seek their daily requirement of electricity by 9 a.m. or schedule a quantity lower than originally contracted under long-term supply agreements, then the surplus should be sold on exchanges.

The surplus power should be offered for sale in the day-ahead-market and if it doesn’t get cleared even then, it will be offered in other segments including the real-time-market, said the ministry's Feb. 28 notification on Electricity (Late Payment Surcharge and Related Matters) (Amendment) Rules, 2024.

The unrequisitioned surplus can include power available against the declared capacity of a unit under shutdown.

The price bid for the surplus power sold on exchanges is capped at 120% of the energy charge or variable cost (part of the tariff that factors in fuel and maintenance costs), plus applicable transmission charges, it said.

If generation companies fail to offer the surplus power on the exchanges, they can be penailised by reducing fixed charges (part of the tariff that factors in construction, equipment and land financing costs).

The detailed procedures for implementation of the sub rule will be issued by the National Load Dispatch Centre within 15 days of commencement of the amendment rules, the notification said.

These amendments will serve two purposes--they will ensure maximum capacity gets utilised for meeting the demand in the sector; and it will have the potential to bring down prices of electricity on exchanges, according to industry expert Rajesh Mediratta. "The energy charges of long-term capacities are usually bids with cap of 120%. It will bring down overall charges of the offered sale on exchanges."

Shares of Indian Energy Exchange closed 4.99% higher at Rs 151.55 apiece on the BSE on Friday.