CERC extends price cap on power exchanges till September 30

Rishi Ranjan Kala | Updated on: Jul 02, 2022

CERC had first put a cap on prices at power exchanges in April.

New Delhi, July 2

The Central Electricity Regulatory Commission (CERC) has extended the price cap on all the market segments on power exchanges at ₹12 per kilowatt hour (kWh), or unit, till September 30, 2022. In April and May, the commission had ordered a cap on exchange prices. The cap ended on June 30.

“Based on the assessment of demand-supply position in the power sector, it is felt that the high demand for electricity is likely to continue over the next few months due to increase in economic activity, high agricultural load on account of sowing of kharif crops, and increase in household demand,” CERC said in its order on Friday.

The power supply position has improved over the last couple of months but the increasing trend of demand might put pressure on market prices once again without commensurate increase in supply in the Power Exchange market, it added.

Peak demand and prices

The Commission in order to protect the interest of consumers decided to extend the May 6 Order till September 30, 2022.

The Commission has been regularly monitoring the trend in prices and volume of electricity transacted at the Power Exchanges, and other related factors having an impact on the demand and supply of electricity.

“The peak demand has been fluctuating and touched 204 gigawatts (GW) in May 2022 and 212 GW in June 2022 (till June 28, 2022). During the period from May 7, 2022 till June 28, 2022, the percentage of blocks in a day with MCP discovered at ₹12 per kWh ranged from 4 per cent to 66 per cent in Day Ahead Market (DAM) and from 2 per cent to 53 per cent in Real Time Market (RTM) at IEX,” CERC said in its observation.

The weighted average price of volume traded in Term Ahead Market (TAM), Intraday and Day Ahead Contingency (DAC) was around ₹8 per kWh in the month of June 2022. Intra-Day contracts have also been trading at around ₹11 per kWh in June 2022 (till June 26, 2022), it added.

In May 2022, the regulator after a review of the market activities took a stern view on the “alleged profiteering” by sellers including some Discoms. CERC had already capped the Real Time Market (RTM) and the Day Ahead Market (DAM) at ₹12 per unit from the earlier ₹20 on exchanges on April 1.

In April, CERC in a suo-motu order directed power trading exchanges to cap spot electricity prices after it observed that market clearing price (MCP) was frequently hitting the ceiling of ₹20 per kWh due to high demand and low supply. It brought down the cap on price ceiling from the mandated ₹20 to ₹12 per kWh.

Published on July 02, 2022
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