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  1. Debt laden UP Power Co is not buying cheap power. Here’s what’s happening

Debt laden UP Power Co is not buying cheap power. Here’s what’s happening

After the debt-laden Uttar Pradesh Power Company (UPPCL) failed to explain to the state electricity regulator the reasons for not buying cheaper power available at power exchanges...

By: | Updated: April 30, 2016 9:46 AM
UPPCL, however, could not provide the commission with relevant information and its officials repeatedly failed to appear for the hearing before the commission, sources said. (Reuters) UPPCL, however, could not provide the commission with relevant information and its officials repeatedly failed to appear for the hearing before the commission. (Reuters)

After the debt-laden Uttar Pradesh Power Company (UPPCL) failed to explain to the state electricity regulator the reasons for not buying cheaper power available at power exchanges, the regulator ruled the state-run discom was “trying to subvert the proceedings by adopting dilatory tactics” and would start proceedings early next month against the senior company officials that could lead to imposition of heavy fines.

In August last year, on the basis of a letter written by the Indian Energy Exchange (IEX), a platform for spot power trade, the commission initiated suo motu proceedings asking the UPPCL to explain why it was not buying power from the exchanges when spot-market power was available at less than the variable cost of certain plants having long-term power purchase agreements (PPAs).

UPPCL, however, could not provide the commission with relevant information and its officials repeatedly failed to appear for the hearing before the commission, sources said. This forced the regulator initiate proceeding against the director (commercial) of the power company and the director of the state load despatch centre (SLDC).

“The commission feels that UPPCL is not paying due attention on this important issue. Due to to the casual approach in complying with the orders of the commission, it hereby initiates proceeding under Section 142 of the Electricity Act, 2003,” the commission said in its order earlier this month.

As per the act, proceeding under Section 142 could lead to imposition of fines on the guilty parties to the extent of Rs 1 lakh for each contravention.

Additionally, in case of a continuing failure, an additional penalty of Rs 6,000 a day could be imposed for the period during which the failure continues after contravention of the first such direction.

Power exchanges, especially IEX, have been urging state-owned, debt-laden power distribution companies to procure much cheaper power from these platforms. As on Thursday, the power rate at the power exchanges available for UP is Rs 3.60 per unit while the peak shortage for the state stood at over 2,000 MW on Wednesday. As per estimates, the state’s newer PPA with private developers in close to Rs 5 per unit.

Due to the pre-eminence of long-term PPAs in the country, only a little over 1% of total electricity generated is traded on the sport market. However, the power rates at the exchanges are often half of long-term PPA rates for many states, especially in the northern states, due to better grid connectivity and low congestion.

In a bid to keep track of state-specific power shortages and availability of power and its rates in different regions on the exchanges, the central government recently launched a portal that shows real-time data along with spot power rates at the exchanges. The VidyutPravaah.in portal shows that all major states have been buying spot power to meet deficits but UP remains an outlier as it has refused to source spot energy despite massive peak shortage and attractive rates.

Gr12

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