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In ICRA's view, implementation of e-bidding with reverse auction for short term power procurement will bring down power tariffs by a paltry 4-5 paise per unit.
It would benefit both discoms and their end consumers. Procurement through such mode would result in a competitive price discovery in a more transparent manner.
"We expect average traded bilateral price levels on all India basis to moderate by about 50-60 paise per unit, which implies a decline by about 13% over the prevailing bilateral traded price level", said Sabyasachi Majumdar, senior vice president, ICRA Ratings.
The power ministry, has recently notified amended guidelines for procurement of power by distribution utilities on short term basis for a year through a competitive bidding.
Effective April 1, 2016, such procurement by discoms shall be on an electronic platform based reverse auction system.
Under assumption of cost-plus tariffs for discoms and a 10.5% share of short-term traded power in the total procurement mix, average retail supply tariff is expected to ease by about 4-5 paise per unit for end consumers on a national basis.
Discoms with relatively higher dependence on short term power, especially in south, could benefit even higher believes ICRA.
"While reverse auction based procurement of short term power is beneficial for discoms, in our view it is a negative for power generation capacity which sell a substantial part of its output through bilateral short term power purchase agreements," Majumdar said.
Share of short-term power transactions in the overall electricity generation in the country has been hovering between 10% and 11% over the past 5-6 years.
In terms of mix of short-term traded power, bilateral route based traded power continues to have the highest share in the range of 52-53% followed by power exchange transactions at 29%. Higher share of bilateral transactions can be attributed to the certainty of supply and tariff rates for the discoms.
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