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Traded power costs zoom to Rs 19/unit in South India

According to reports, the cost of electricity purchased over the Indian Energy Exchange by buyers in the South has shot up. In the trading that happened today (i.e., for supply tomorrow), the maximum price at which power was bought shot up to Rs 19 and minimum price was at Rs 6.01.

The average price for the region was Rs 10.50 a unit.

In comparison, the figures for ‘rest of India’ were: Rs 1.29 minimum, Rs 3.95 maximum and Rs 2.65 average.

This means that the minimum price of traded electricity in the South was way above the maximum in the rest of the country.

Sources in the know attribute this to transmission constraints, which gets accentuated due to various reasons. If the southern States have to buy electricity from the rest of India, there are only two lines. One brings power from the Eastern region, and the other from the Western region.

The Western corridor is a much smaller one that can carry a maximum of 800 MW at any point in time, and is most of the time fully underwritten.

The Eastern line (Talcher – Kohlar) is the lifeline of the South. This line has a capacity of 2,500 MW, but most of the time, due to technical reasons, only 2,000 MW is operated.

Here again, a chunk of the capacity is already taken up by long term contracts. So, precious little transmission capacity is available.

This is normal, and hence, one always sees power purchase costs being much higher in the South compared with rest of India. But today there was another factor.

Karnataka has invoked the infamous ‘Section 11′ of Electricity Act. The section empowers a state utility to ban sales of electricity outside the State, in situations of emergency.

Karnataka has invoked this section and has made it applicable from February 1.

A senior official of IEX told Business Line today that Karnataka would supply about 330 MW to the other States.

This could not be done today.

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