PSPCL's power purchase cost set to head north this season

Tribune News Service

Aman Sood

Patiala, March 3

Following stringent guidelines set by the Union Ministry of Power, the average power purchase cost of Punjab State Power Corporation Limited (PSPCL) is all set to rise this season.

The new norms, which will come into effect next month, ensure that those “with enough finances at hand can buy additional power” while those under subsidy burden will face tough times.

New norms from april

• New norms will be in force soon; those “with enough finances can buy addl power” while those under subsidy burden will face tough times
• Average market price for power purchase in 2021-22 was Rs 4.62/unit & it rose to Rs 6.32 per unit in Jan 2023

Top performer

• PSPCL has been declared the top performer among all discoms across India for energy conservation measures under the PAT (perform, achieve and trade) scheme of the Power Ministry. It is a flagship scheme under the national mission for enhanced efficiency

The average market price for the power purchase in financial year 2021-22 was Rs 4.62 per unit and this increased to Rs 6.32 per unit in January 2023.

The price of power in the market has increased sharply due to various reasons. It might rise further in the coming two months, ahead of the paddy season that starts in June.

Senior PSPCL officials confirmed that a new high price market segment at power exchanges had come up. It will allow electricity producers and sellers with production cost of more than Rs 12 per unit to participate in the market. Only such buyers, who are in deficit, and can afford to pay high prices, will be able to purchase power in this segment.

“It means Punjab will have to buy power at higher rates to meet high paddy cultivation demand. This will make it tougher for the state where 90 per cent of domestic and almost all agriculture consumers are availing power subsidy,” said a top PSPCL official.

At present, there is a price ceiling of Rs 12 per unit at the day ahead market (DAM) in energy exchanges. With the ceiling, generation companies having high variable costs for operating their plants are generally not keen on selling electricity at energy exchanges. This in turn results in stranded power generation capacity.

In March last year, when the power purchase price at the DAM touched Rs 19 per unit, the Ministry of Power and Central Electricity Regulatory Commission (CERC) capped the spot price at Rs 12 per unit.

“Nowhere in the world has such a segment been conceptualised to address the issue of windfall profit of the infra marginal generators. It appears to be an attempt to bail out private power generators and big conglomerates,” opines VK Gupta, spokesperson, the All India Power Engineers Federation.

Recently, the Power Ministry issued directions to companies operating power plants with imported coal to function at full capacity. The companies were told that the rates of supplying electricity to the power purchase agreement (PPA) holders would be worked out by a committee.

The directive comes into effect on March 16 and would remain valid till June 15, 2023. The emergency law has been invoked for the second time during the last few years.

The power consumption in Punjab went up by more than 12 per cent in January. The authorities are expecting that the upward trend would continue in the coming months.

“The Weather Department has alerted the authorities about hot summer this year. It means more demand for power in the coming months. In February, maximum power demand remained more than 7,000 MW. The PSPCL has been managing the power supply of over 1,500 lakh units daily. The power corporation is returning 350 lakh units every day to states under the banking arrangements. To meet the power shortage, the PSPCL is purchasing more than 280 lakh units,” said a senior PSPCL official.

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