States likely to be charged more for unscheduled power use

Written by Sanjay Jog | Mumbai | Updated: Oct 14 2009, 04:08am hrs
The Central Electricity Regulatory Commission (CERC), in a bid to curb power overdrawal by certain states, has proposed a rise of 100% in the additional unscheduled interchange (UI) charge to Rs 18.07 per unit which is 100% of the maximum UI charge of Rs 9.07 per unit at grid frequency below 49.2 Hz. If any state resorts to overdraw power at the grid frequency below 49.2 Hz, it will have to pay additional UI of Rs 18.07 per unit.

CERC said its analysis of the frequency profile during April-August 2009, revealed that there has been consistent deterioration, especially in April, June and August. This indicated that the 40% additional UI charge for overdrawal at frequency below 49.2Hz has failed to serve the intended result. With the reservoir level reaching below the average of last 10 years, it is apprehended that the power supply position in the ensuing months is unlikely to improve. Further, the power regulator noted, That a number of grid constituents resort to reckless and frequent overdrawal at frequency below the mandated 49.2 Hz needs no emphasis. To make matters worse, there have also been instance of under injections by the generating stations at frequency below 49.2Hz.

CERC observed that average cost of power through UI even after additional charges is Rs 4.94 per unit while the cost of power through power exchange was Rs 7.39 per unit as per data of market monitoring for June. Arranging power through exchange has attendant uncertainties both in respect of price as well as availability. The success of transaction at power exchange depends on corridor availability. During April the price differential between NR and other regions due to congestion and market splitting reached to Rs 9 per unit and on August 11 it went as high as Rs 16.12 per unit. According to CERC, due to multiplicity of factors like adverse climate, low rainfall, congestion and in case of UP and UI billing ambiguity, the imposition of 40% additional charges could not bring desired result in grid discipline.

September 2009 also witnessed heavy over drawls by some states in Northern Region causing frequency below 49.2 Hz. for 45.77 % of time on some days.

However, analysts said that CERCs move would shot up the spot market of power both in bilateral and power exchanges. In fact whenever the prices of UI have been jacked up it has got a direct ramification on the spot market. UI mechanism is one way of bringing grid discipline under which any state over drawing its scheduled quantity allocated by Central and state pools will have to make payment as per fall in frequency for over drawal, power analyst D Radhakrishna said.