India warns states against selling power at high price on exchanges (updated)

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12/10/2021 08:37

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    By Sudarshan Varadhan and Sethuraman N R
    CHENNAI/BENGALURU, Oct 12 (Reuters) - India's power ministry
has warned states that federal power producers will curtail
supplies of electricity to them if their utilities are found
selling power on exchanges to take advantage of surging prices.
    Asia's third-largest economy is facing large-scale outages
as several power plants have low coal inventories amid a sharp
spike in global energy prices.
    Some states, instead of supplying electricity to their
consumers, are imposing rolling power cuts known as load
shedding, and selling power at higher prices to energy
exchanges, the ministry said in a statement, without giving
details.
    States that do this risked having federally supplied power,
known as unallocated power, cut, it said.
    If states are not serving their customers but are "selling
power in the power exchanges at higher rate, the unallocated
power of such states shall be withdrawn and allocated to other
needy states," the ministry said.
    Federal government-controlled power producers such as NTPC
Ltd and Damodar Valley Corp, sign long-term power purchase
agreements with distribution companies for sale of most of their
output. 
    However, 15% of their power is controlled by the federal
government, which sells the so-called unallocated power to
states.
    The ministry said if any state had a surplus of power, it
should inform the federal government which would allocate that
electricity to states that needed it.
    The federal government warning comes after many states have
complained of high power prices on exchanges, which have helped
Indian Exchange Ltd  IEX.AS  shares surge to record highs in
recent days. 
    The chief minister of Andhra Pradesh state, Y. S. Jagan
Mohan Reddy, wrote to Prime Minister Narendra Modi to complain
about the rising prices on exchanges, which he said had trebled
to 15 rupees for a unit of power from mid-September to Oct. 8.
    Reddy asked for an increase in the supply of coal, according
to a copy of his letter, reviewed by Reuters.
    Day-ahead prices of power at Indian Exchange have surged to
20 rupees a unit, according to its website on Tuesday.
    The chief minister of the capital, New Delhi, warned on
Saturday of a power crisis because of the coal shortage that has
already brought electricity cuts in some eastern and northern
states.  urn:newsml:reuters.com:*:nL1N2R50BS  
    The power ministry directed NTPC and Damodar Valley to
ensure supplies to the capital's distribution companies.

 (Writing by Nidhi Verma
Editing by Robert Birsel)
 ((Sethuraman.NR@thomsonreuters.com; (+91 8061822737); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))