With the increased integration of the southern power grid with other regional grids, the cost of electricity on the IEX has hit a low, auguring well for industry and power distribution companies.
Also, the gap in price between the southern grid — where the rates have been typically higher — and the other regions has narrowed. On the exchange earlier this month, the prices in the southern grid matched those in other grids.
For instance, in the first week of July the Average Clearing Price (ACP) on the IEX for the southern region was ₹2.17 a kWh against the Market Clearing Price (MCP) of ₹2.14 for the other regions. Between January and July 2016, the ACP was ₹2.91 against an MCP of ₹2.44.
The gap was much higher last year. During January to July 2015, the MCP was as low as ₹2.72 a kWh. But the ACP was much higher in the southern region at ₹3.90 for Andhra Pradesh, Telangana and Karnataka, and ₹5.11 for Tamil Nadu and Kerala. Now, even within the South, the price differential is no longer relevant as the region is well integrated and prices are uniform, sources familiar with the development said.
According to industry sources, apart from the improved transmission infrastructure, the lifting of constraints on open access by Tamil Nadu and Karnataka has led to increased availability of power. Producers in both States can now sell outside the State.
Though the corridor availability is still restricted, it is better than last year. In May 2016, the West and East to South corridors were available for almost 50 per cent of the time for the exchange market; in June, the corridor availability increased to about 85 per cent, sources said. Open access consumers in the southern States can save up to 30 per cent of their power procurement cost on the IEX platform. Even distribution companies can opt for sourcing power from IEX, rather than go in for short-term deals as prices are at such lows, sources said.