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With monsoon boosting hydro power production, injecting some 25,000 MW-odd cheap power into the system, energy prices at the exchanges have fallen below Rs 2 per unit and peak demand deficit has come down to below 1,000 mw level - a feat that has not been achieved in the past.
Twice last week, power deficit during peak demand period dipped below 1,000 megawatt level while total power consumed was around 1.3 lakh megawatt. Last year, the deficit used to hover around 5,000 MW and even touched 10,000 MW some days.
This is good news for households and industry as distribution companies are increasingly replacing costly power with cheaper energy available at the exchanges.
"When power distribution companies buy cheaper power from exchanges it leads to savings in costs, which we pass on to consumers," chairman of an electricity regulatory commission said on condition of anonymity. Private power distribution companies in Mumbai, New Delhi, Kolkata and Maharashtra are cashing in on the opportunity, reducing their cost of operation.
Bulk industrial consumers are buying cheaper power directly from exchanges and saving on production costs. "States like Uttaranchal, Bihar, Chhattisgarh, Telangana, Andhra Pradesh, Gujarat, West Bengal and Delhi as well as franchisees from Maharashtra now have been buying power from exchanges regularly," said Rajesh K Mediratta, director for business development at Indian Energy Exchange.
"While Uttaranchal, Chhattisgarh and Telangana have been buying power to meet demand and bring down power cuts, others like CESC, Torrent Power and the discoms in West Bengal, Delhi, Gujarat and Bihar are buying power to save costs," he said.
Sabyasachi Majumdar, senior vice-president at ICRA, said cheaper power means less loadshedding for households in some states. "It also means reduced input costs for industries in states that allow procuring power from alternate sources. Although not all states facilitate alternate sourcing through favourable regulations and creation of adequate transmission facilities, the states that do, like, Karnataka, Andhra Pradesh and Telangana help industries save a lot on power consumption costs," he said.
According to Mediratta of IEE, cost of thermal power generation typically varies between Rs 2- 4 per unit. "As prices at exchanges dip, costly power generating units are made to idle by states. This power is replaced by cheaper power from exchanges," he said.
"Every day a few thousand megawatt of power scheduled to be generated from thermal power plants go waste as they find no buyers. Now with monsoons in full swing additional power is being injected into the system, bringing down prices further. At this point, some states are finding it profitable to buy power from exchange instead of buying from their contracted sources. As additional hydel power is injected into the system power prices will further dip - consumers would benefit," Mediratta said.
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