The Hindu Business Line : SEBs wheel in cheap power through smart overdrawals

New Delhi, Dec. 22 At a time when power shortages are driving up electricity prices across the country, a handful of savvy SEBs, led by Tamil Nadu, Punjab and Karnataka, are cashing in on the real-time arbitrage opportunities available on the grid by a simple expedient: they are overdrawing from the grid across precise time blocks which coincide with the times the others are drawing less power as demand dips in their States.

Result: the clever ones are getting surplus electricity at dirt cheap tariffs in the bargain.

These States wait for the frequency surges caused when the demand from other States falls. Then they come in and buy at prices ranging from less than Re 1 unit to around Rs 2-3 a unit during the non-peak hours. The normal tariff across most States ranges from Rs 3-11 for non-agricultural consumers.

“A handful of States are taking advantage of the Unscheduled Interchange or UI component of the current tariff regime. Under this regime, during periods of rising grid frequency, overdrawing becomes lucrative. Grid frequency has been surging during part of the day, mainly during afternoons and late evenings, since demand has been coming down considerably in the northern parts due to the mild winter conditions,” a Central Electricity Regulatory Commission official said.

States such as Punjab are buying cheaply from the grid during the afternoons and supplying that power to their farmers while Southern states are trying to plug general shortfalls through this route, by redistributing loads across odd hours.

In September, for which the latest data is available with the Central Electricity Authority, short-term electricity transactions under the UI route totalled at 1,890 MUs (million units).

In comparison, only 278 MUs were traded on the Power Exchange while bilateral deals added up at 1,604 MUs through power traders and another 366 MUs directly between States.

The minimum price of power transacted through the UI route was Rs 0.48/unit for the integrated North-East-West (NEW) grid while for the Southern Grid it was Rs 0.08/unit. The maximum UI rate is capped at Rs 10/unit by the regulator.

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