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Power situation in South will improve next year: Govt

According to reports, the power situation in the South will improve by next year when the region will get connected with other grids, said Power Secretary P. Uma Shankar.

Peaking shortage will continue this year, with the southern region facing the highest deficit of 26 per cent, followed by the North-East (10 per cent) and the northern region (1.3 per cent), said the Central Electricity Authority (CEA).

Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Puducherry face severe power cuts during summer as they cannot get electricity from other States.

This is because of transmission constraints between the Northern-North Eastern-Eastern Western (NEW) grid and Southern Regional grid, which restrict the flow of power.

Power Grid Corporation of India has taken up a Rs 1,930-crore project that will connect the southern grid to the national network.

This will facilitate the creation of the All-India Synchronous National Grid when all the five grids — Northern, Eastern, Western, North-Eastern and Southern — are interconnected.

According to the CEA, studies on anticipated power supply position for 2013-14 indicate there would be a shortage of 6.7 per cent.

In the South, the CEA expects the power deficit to come down in 2013-14, post the commissioning of the 1,000 MW Tuticorin and 2,000 MW nuclear projects, and other State-owned capacities coming on stream.

At the same time, the financial restructuring scheme opted by State electricity distribution companies (discoms) would help them buy more power. Andhra Pradesh and Tamil Nadu have implemented the schemes, said Uma Shankar.

Interestingly, this summer spot electricity prices did not go up.

According to Indian Energy Exchange (IEX), the market clearance price (average pan-India price without congestion) has dropped to Rs 2.027 a unit in June against Rs 4/unit in the same month the previous year. In May 2013, prices dropped to Rs 2.73/unit against Rs 3.42/unit in the corresponding previous period; in April the average price was Rs 3.16/unit (Rs 3.12/unit).

“Low exchange prices provide opportunities to both industries and discoms. Discoms should also look at their long-term PPAs (power purchasing agreements) and compare the variable costs with the price prevailing on the exchange. If the variable cost of long-term power is costlier than the exchange price, they should buy from the exchange,” said Rajesh Mediratta, Director- Business Development, IEX.

At the same time, power producers will get a boost if the Cabinet Committee on Economic Affairs (CCEA) gives its go-ahead to the proposed fuel (imported coal) pass-through mechanism.

Independent power producers such as Adani (3,300 MW), CESC (1,200 MW), GMR (1,600 MW), Lanco (500 MW), Reliance Power (1,800 MW) and JSPL (1,200 MW) would benefit from a fuel pass-through mechanism as they will be able to operate at higher plant load factor (PLF), said Macquarie Equities Research.

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