In a significant development, the Power System Operation Corporation (Posoco) on Thursday instructed the three power exchanges in the country to restrict 27 discoms across 13 States from trading on their platforms on account of non-payment of outstanding dues.

For the first time, the Posoco, in a letter to the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange (HPX), said buy and sell transactions in all products of the power market for discoms shall be entirely restricted till further notice from the power delivery date of August 19. The action is likely under the Electricity (late payment surcharge and related matters) Rules, 2022, notified in June. The total dues are around ₹5,085 crore, of which those from Telangana, Tamil Nadu, Rajasthan, Jammu and Kashmir, Andhra Pradesh, Maharashtra and Karnataka total upto ₹4,761 crore.

States such as Telangana will challenge the action in court, while some are working to pay the dues. Andhra Pradesh has already announced plans for paying up in 12 instalments, sources said.

Nangia Andersen Leader (Power Advisory) Arindam Ghosh said this is definitely a good move, but enforcement can only be accomplished if it is properly planned. “Posoco should have anticipated the implication of abruptly barring the utilities. For the first time in power exchange history, the day-ahead-market (DAM) was extended for two hours so that these utilities could trade. It resulted in a chaos in the power system. Such actions can lead to major disbalances in the power market, jeopardising discoms’ power portfolio management. It makes no sense to impose such a ban if they have to surrender to the pressure of the discom. There is a need for more planning and stakeholder consultation before such sudden actions can be taken,” he added.

States’ position

The Telangana power utility has said it is going to move contempt proceedings in the High Court. “The High Court of Telangana has issued orders in April, allowing the Telangana discoms and the Telangana State Power Coordination Committee (TSPCC) to operate through the power exchanges as well as secure power through open access without any hindrance, pending disposal of our writ petition,” a top official of the utility said.

“We request you not to take any further action restricting Telangana utilities either from drawing or selling power through the exchange,” the utility asked the Centre in its response to the move.

A senior official from another State pointed out that power traded on these exchanges is around 6-7 per cent of the total. “There will not be much impact. Besides, peak demand requirement is also not there. But States with high dues should clear their late payment surcharge (LPSC) as with the approaching festival season, electricity demand will rise,” he added.

IEX, quoting the power demand data from the National Load Dispatch Center, said during July 2022, the energy consumption at 128 billion units (BU) saw 2.3 per cent y-o-y growth whereas there was a decline of 4 per cent compared to June. The national peak demand at 190 GW was lower by 5 per cent y-o-y and 10 per cent lower on an m-o-m basis due to a good monsoon spell. Because of the reduction in demand, the clearing price in the DAM reduced to ₹5.41 per unit in July from ₹6.49 per unit in June.