Centre warns states against selling power at exchanges for higher price

As the country grapples with power outages, triggered by unprecedented coal shortage, the Union Power Ministry warned states and their power corporations against selling electricity on exchanges to benefit from over-the-roof prices.

India’s domestic coal shortage was compounded by high import costs, riding on sharp rise in demand for the fossil fuel from China.

The Power Ministry issued the diktat after it found out that some states (names not revealed) were imposing load shedding while selling electricity at higher prices to energy exchanges. States that do this risked having federally supplied power, known as unallocated power, cut, it said.

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The power ministry statement read: “States not meeting the needs of its consumers but selling power in the power exchanges at a higher rate, the unallocated power of such states shall be withdrawn and allocated to other needy states”.

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The National Thermal Power Corporation (NTPC) and Damodar Valley Corp are controlled by the Union Government. They are, however, permitted to get into long-term power purchase agreements with state distribution companies to sell 85% of their output. The remaining 15% is under the control of the Union government, which again sells it to states.

While admitting a nationwide shortage of coal-generated electricity, the Centre reminded all states that any surplus power with states is required to be notified to the Centre, which will then provide it to the needy states.

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The Centre, however, found several states selling excess power at higher prices on exchanges. Andhra Pradesh Chief Minister YS Jagan Mohan Reddy asked the Prime Minister’s intervention to keep a tab on rising per unit prices of power on exchanges, which he claimed trebled to ₹ 15 for a unit of power from mid-September to October 8, reported NDTV.

Delhi and Punjab governments too approached the Prime Minister’s office to intervene and bring down per unit price at exchanges, which, as per media reports, have surged to ₹ 20 a unit.