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Consumers to benefit with open access, says IEX

India Coal Market Watch

December 16:  Both domestic and industrial consumers of electricity stand to benefit immensely if open access of electricity is allowed in West Bengal, according to an official from the Indian Energy Exchange (IEX).

Power purchase costs could be optimised by replacing costlier power from distribution companies (discoms) with power from IEX, which operates on the price-discovery model, the exchange’s Director (Business Development), Rajesh Mediratta, said.

Mediratta was speaking at an interactive session organised by MCC Chamber of Commerce & Industry.

He pointed out that since November 2014 they have noticed a decrease in exchange-traded electricity prices.

“This trend will remain through this year and perhaps for some time,” Mediratta said, adding that the market price of power dropped to Rs 2.85 /kwh on an average between April and November, 2015 compared to Rs 3.51 /Kwh in 2014-15.

He further said that over the last five years, about 80,000 MW capacity has been added in the country but demand has grown by only 30,000 MW in this period, creating a big demand-supply gap.

Power exchanges provide a competitive option for power purchase and IEX rates have always been lower than bilateral rates due to the price-discovery process, Mediratta said.

IEX data showed that its power price was lower than bilateral price for all the years reviewed between 2010-11 and 2015-16 (till September 30). The average price on IEX during the period stood at Rs 2.80/kWh as against Rs 4.06/kWh for bilateral prices.

Bibhu Charan Swain of Power Tech Consultants explained that higher cross-subsidy surcharge has significant impact on the open access and power trading market in West Bengal, affecting the purchase of power from IEX or from a third party very badly.

Deepak Agarwal, Chairman of the Steel Standing Committee of MCCI mentioned that, at present, the electricity tariffs of all the industrial consumers of West Bengal at HT and EHT levels are more than Rs 6/kWh which is very high for any industry. Further, the tariff is likely to increase in the coming financial years, making it further difficult for the energy- intensive industries which do not have a captive generating plant.