A not-so-hot summer has not merely affected the air-conditioner sales in the country but impacted the fortunes of power producers, who capitalise on every opportunity to trade power in this peak demand season.

The weak demand scenario has particularly affected the merchant power plants.

According to sources in Financial Technologies and Power Trading corporation run India Energy Exchange (IEX), the average tariff in the spot market is varying between Rs 3.30 and 3.80 a unit as against Rs 4-5 a unit in April 2010.

“Compared to last year the demand scenario is relatively weak so far this year as there are more sellers than buyers,” an exchange official told Business Line . The official blamed the improved supply scenario as well as a less than expected growth in demand for the low tariff of power.

According to him, considering the average cost of power of the new generation units at Rs 3.30 a unit, the spot market has not proved to be remunerative enough in 2011.

Confirming the development, sources in a Gujarat-based emerging private sector power major said that the low demand had even forced the company to “back-down” its generation units.

Back-down is a term used in the power generation sector to describe a situation when units are run at lower capacity due to lack of demand load.

According to a senior official in the West Bengal Government, the unexpectedly low demand growth has not merely saved the State from otherwise anticipated power-cuts but also resulted in a huge excess of not less than 200 MW even in the peak hours.

The excess is as high as 1000 MW in the non-peak hours.

“It was a nice opportunity to make money had there been adequate buyers. As against an average weighted tariff of Rs 3.50 per unit realised through such spot sales, we are realising a mere Rs 1.90-2.10 a unit this year. Moreover there are not many buyers even at this rate, so we had to back-down units regularly,” the official said.

According to him, not only the State run units but the NTPC plants in the region are also forced to back-down due to low demand load. Confirmation of this was not available from NTPC.

Sources in the Kolkata-based CESC Ltd said that the tariff on spot market was not remunerative so far. “We are making some token sales in non-peak hours,” a company official said.

CESC operates in the regulated environment and is eligible to sell only excess power to spot buyers.

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