Are electricity tariffs set to rise? This is what’s weighing on power distribution companies

By: |
Updated: April 3, 2018 12:57:13 PM

The inability to meet demand in the peak season due to a mismatch between renewable energy generation curve and insufficient domestic coal supplies has since long troubled India’s power sector.

delhi electricity, DERC, electricity tariff, electricity bills, power tariff, eletricity tariff, news on delhi electricity, detail news on  delhi power tariffThe monthly market clearing price has increased by nearly 25 percent from Rs 3.20 per unit in January this year. (PTI)

The inability to meet demand in the peak seasons due to a mismatch between renewable energy generation curve and insufficient domestic coal supplies has since long troubled India’s power sector. This year too the scenario doesn’t seem to be much different from the previous years. “We are staring at a huge problem because peak power deficit scenario is unlikely to improve anytime soon,” said Vivek Sharma, Senior Director, CRISIL Infrastructure Advisory. The discoms will remain under pressure and the spot prices of electricity will continue to surge surge in the near term, the ratings agency said.

Various structural and seasonal factors which may put pressure on spot prices of electricity include unmet and suppressed demand, no new thermal capacities announced in the past 2 years, and inability to meet peak demand because of mismatch with renewable energy generation curve and insufficient domestic coal supplies, the report said.

The monthly market clearing price has increased by nearly 25 percent from Rs 3.20 per unit in January this year to Rs 3.97 in March at the Indian Energy Exchange (IEX). This is a big jump from nearly Rs 2.50 average recorded in the corresponding period of the past two fiscals. The monthly peak prices have averaged Rs 7.1, nearly double in the levels recorded in FY17 on power exchanges this year.

Delhi is the first state in the country that reduced electricity tariffs in the last three month of 2018-19. The electricity tariffs were reduced by Delhi Electricity Regulatory Commission for consumers all across the categories in the state by up to 32 percent.

The report also says since extra 4 crore households will be electrified over 2018 and 2019, and imminent general elections and state polls, the demand will only increase further. However, the increase in demand will also help power producers recover just a part of their fixed costs, the report said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.