IEX CEO and MD Jayant Deo told FE, The softening in prices is attributed to the absence of agricultural load in northern India, mild temperatures in most parts of the country, good hydro-support in J&K, HP, Uttrakhand and the southern parts of the country due to rains, and the recent cyclone in Mumbai also helped to fill the hydro reservoirs in central India. He also added that the average price for the last 3 days (November 22-24) has been Rs 2.12 per unit, with a minimum clearing price of Rs 1.47 per unit in the early morning hours from 12 am to 5 am. We have witnessed a yawning gap between sell- bid and buy-bid. The average daily sale bids in the concerned period was 60 mu & the average daily buy bids were only 24 mu, thus creating a surplus-supply scenario, he added.
Sources in the power ministry said that due to a reduction in prices, some states like Rajasthan and Madhya Pradesh, have simply dumped their bilateral contracts in which the price was quoted at around Rs 7 per unit. They had earlier signed long-term contract fearing that there would be a rise in electricity prices. Moreover, states prefer to carry out load shedding and tackle the situation by not going in for costlier power.
Sources in PXI said, There are no elections, no exams, no political compulsions of providing 24x7 power supply. There is a gradual dip in the temperature, as a result of which the demand is on a lower side. Most of the aggressive buyer states like Rajasthan, Haryana have already purchased power on long-term bilateral contracts for November, fearing high a spot price. More importantly, Maharashtra has an outage on Chandrapur Parali circuit I and II, which is expected only by the end of November. This forces the state to implement an additional scheduled load shedding to the tune of 2,000-25,00 mw due to transmission congestion. This has led to a situation in which private utilities like Tata Power and Reliance Infrastructure have been advised not to purchase power even at lower rates.
IEX and PXI sources also said the current situation can be compared with the situation in which the Central Electricity Regulatory Commission earlier imposed a price cap of Rs 8 per unit for day-ahead transactions. However, there was no significant impact of such a capping. The hourly prices were the same or more than Rs 8 per unit only for 162 hours, out of a total of 1082 hours(45 days). In the month of September, the prices were on the lower side due to rains in many parts of the country. In Maharashtra, the demand remained subdued due to rains and there were no purchases made by Maharashtra. Only Haryana purchased power and prices started touching Rs 8 per unit from September 24. The prices were seen to peak on October 2-3, when prices stood at Rs 8 per unit. Following this , the were again seen to come down to Rs 4.9 per unit.