The Hindu : New Delhi News : Discoms claim they do not make profit from sale of surplus power

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Sunday, Jun 05, 2011
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Discoms claim they do not make profit from sale of surplus power

Smriti Kak Ramachandran

NEW DELHI: Selling surplus power to other States was a sure shot way to earn some money, but if the discoms are to be believed, even that option is no longer working for them. They claim that the power sold as surplus fetches them much less than what is spent on purchasing it.

According to discom sources, the companies manage to sell “surplus” either during the night or in the early hours of morning and the prices of power during those slots are much “less” than the ones at which they buy power.

“Discoms sell power that is not required for the city's consumption, but it is incorrect to assume that they make money from the sale. Usually, the price is much less than what they purchaser it for. Also, the price of power depends on a number of factors, including weather. If the weather is pleasant in Delhi, it is usually so in the region as well. During such times, surplus power sometimes can fetch as low as Re.1 per unit,” said a source.

Citing an example a source said: “On May 21-22 on account of unexpected rains, Delhi's power demand reduced by 500 MW to 1000 MW in a matter of minutes. In such a scenario, the ‘surplus' power is diverted through the Unscheduled Interchange mechanism and also leads to backing down of some power plants. Unscheduled Interchange (UI) rates are very unpredictable and can vary up to Rs.8.73 for the seller and Rs.17.46 for the buyer.”

“On account of weather conditions, the UI rates drop drastically, even falling to below Rs.1 per unit – even touching 0 for a brief period. This indicates that there are no takers for the ‘surplus' power, which might have been in ‘short supply' just a few minutes ago,” the source added.

Discoms claim that while the phenomenon of peak power demand lasts only for a few minutes, power is made available to them in slots of at least four hours each. Most long-term power that they arrange is on Round the Clock (RTC) basis.

“The average price for selling surplus power during night lean periods or off peak periods varies around Rs.2.50 per unit. This means that the power which the discoms buy for an average price of around Rs.3.9 is sold by them at a discount of Rs.1.4 per unit. This pushes the price of the power upwards. With planning and forecasting, discoms attempt to sell ‘surplus' power at above the average price of Rs.3.9 per unit. This is increasingly becoming challenging with grid codes and Central Electricity Regulatory Commission regulations ensuring grid discipline,” the source said.

No benefit to discoms

Discoms also claim that they “do not earn any profit” from sale of surplus power. “Even if the discoms work to sell power at higher rates, they do not get any benefit. The earnings from the sale of power do not constitute the earnings of the discom. The costs are passed on to the consumers, affecting the tariff. Whatever money the discoms realise by selling ‘surplus' power goes to off-set the final revenue gap,” the discoms assert.

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