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South’s power utilities hum on full reservoirs

According to reports, exactly a year back to this day, the southern States were desperately power starved. They were running their thermal plants at full steam, buying power from whatever sources possible at exorbitant rates .

Load-shedding was on for as long as 10 hours with industrial and other high-tension consumers bearing the brunt. A poor South-West monsoon had left hydel power generation whining, not humming.

But the power situation is significantly better this year. Thanks in part to hydro-power generation, both Tamil Nadu and Andhra Pradesh have withdrawn load-shedding. Tamil Nadu will, however, review the load-shedding situation post September.

The bountiful South-West monsoon has filled up most reservoirs and the power situation has improved dramatically. Both Tamil Nadu and Andhra Pradesh have withdrawn power-cuts — official and unofficial — bringing cheer to all sections of consumers.

As of Friday, the major reservoirs in the South held as much as 14,176 million units of energy, nearly two-and-half times what they did on the same day last year. At roughly Rs 5 a unit , this means a Rs 4,100-crore windfall for the State power utilities. With that extra energy becoming available , industry will not need to switch on the diesel generating sets, resulting in a significant savings for the manufacturing sector. However, process industries, which need reliable and quality power, will continue to rely on captive generating sets.

The South has a combined hydro power installed capacity of 12,524 MW, a little over a fifth of the 57,941 MW total installed capacity in the region, including Central sector, nuclear and private projects under open access.

S. Chandrasekhar, Managing Director, Bhoruka Power Corporation Ltd, a private sector player with about 120 MW of installed hydro and wind power projects, says the power situation in the South is definitely much better than what it was last year. All the reservoirs are overflowing and hydel generation is higher than what it was a year ago. Yet, for the power position to be comfortable till the next monsoon, the reservoirs need to be full till end-September. For that, the rains have to continue.

Chandrasekhar, who is also Chairman of the energy and power sub-committee of the Confederation of Indian Industry — Southern Region, says the good monsoon per se will give a breather in terms of energy availability and peak shortages may dip, but the overall supply shortage will continue. This is simply because incremental generating capacity has not kept pace with demand.

In 2012-13, the southern region faced was 15.5 per cent deficit in energy availability and 18.5 per cent short on peak demand. For this year, the shortages are projected at 19 per cent and 26 per cent respectively.

So, what the overflowing reservoirs mean is that electricity utilities in the South will either back down from costly power purchases contracted with private producers or not buy power from other companies at a higher rate.

Chandrasekhar explains that the real benefit of the good monsoon will be felt only next year, when the electricity boards file their annual tariff petition with the regulatory commissions. The utilities would have projected the cost of power purchase based on their estimates of what hydro power generation would be. Now, with the good energy storage in the reservoirs, actual cost of power will be known when they file their petitions. Consequently, the quantum of tariff increase that the regulatory commissions may allow will be lower.

The good monsoon offers the States the luxury of a better hydel-thermal generation mix. However, not all States are happy even with the increased hydel power generation. As S. Venugopal, Member (Finance), Kerala State Electricity Board, says, “we cannot store much water, even lesser energy.” Kerala gets more than 70 per cent of its electricity needs from hydel sources, but its storage capacity is limited. A substantial part of its generating capacity comes from run-of-the-river systems.

The hydel capacity build-up, according to Venugopal, could not have been more inopportune. For, demand has fallen and prices have crashed. Kerala will not be able to sell power outside. It still has a peaking power shortage and operates a diesel power plant at Kozhikode, where the cost of generation is around Rs 12 a kWh.

According to M. Sahoo, Special Chief Secretary – Energy, Andhra Pradesh, the higher storage in the reservoirs is good news for about 2.5 lakh industrial consumers in the State as they will get their full contracted demand after a long time.

The Tamil Nadu Small and Tiny Industries Association says industries in the State are heaving a sigh of relief as they have cut back on using their diesel generating sets. For Tamil Nadu, the average cost of electricity supply during 2012-13 was Rs 6.85 a unit. The State utility recently tied up for long-term power purchase with private producers at Rs 4.91 a kWh. With hydro power generation increasing, its cost of power generation will dip substantially.

According to Anuj Sharma, Managing Director, Praxair India and Chairman, Energy committee of the Bangalore Chamber of Industry and Commerce, the good water levels in reservoirs have resulted in higher plant load factor for hydel generating stations. Those operating hydro power plants had a tough time managing working capital needs last year due to the low PLF following the poor storage in the reservoirs.

With the manufacturing sector going through a slowdown owing to the general economic situation, industry is hoping that State utilities will cut tariffs, as they generate hydel power at a much lower cost. A tariff cut will come in handy for the industry during the slowdown period, they say. Industry representatives want the State power utilities to speed up capacity addition, both hydro and from other sources, for a transformation of the perennial shortage situation.

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