As summer heats up, TN forced to pay thru its nose for power

Delay in power tariff payments to suppliers within the State and inadequate transmission infrastructure that limits Tamil Nadu’s ability to bring in power from outside the State are driving up costs for the State-run Tamil Nadu Generation and Distribution Corporation.

Added to this, demand from all southern States is rising as summer heats up.

To purchase 2,000 MW The Corporation will buy over 2,000 MW of power from generation companies outside and inside the State to tide over the peak demand in summer. Tamil Nadu Electricity Regulatory Commission cleared the proposal on Thursday for the period from October 2015 up to May 2016.

The utility will procure 1,030 MW of round-the-clock power from inter-State suppliers at ₹3.89 a kWhr and 986 MW at ₹ 5.05 a kWhr from generators within the State.

Jindal Power Ltd will supply 500 MW from the western region and is the lowest bidder among the inter-State suppliers. The other eligible bidders outside the State matched the bid.

However, intra-State bidders declined to reduce prices. About 20 power generating facilities within the State have submitted bids, the utility said in its petition to the TNERC.

Transmission constraints It also pointed out that given the transmission corridor constraints just about 100-200 MW would actually be realised from inter-State sources. This increases its dependence on intra-State supply.

Transmission infrastructure constraint generally drives up power prices in the southern region as compared with the North, East and West which are better linked.

Suppliers’ grouse Power suppliers within the State have pointed out that Tamil Nadu restricts the sale of power to other States, which limits their business opportunity. Telangana pays about ₹ 5.95 a kWh and Kerala and Karnataka are also active buyers. Also, payment delays of more than seven months by the utility have crippled their relations with banks.

On the IEX, the power exchange, power prices have been steadily going up from February in tandem with rising summer temperatures. In February the average Area Clearing Price was ₹ 2.51 a unit. As of now the Day Ahead Market price is around ₹3.24.

The TNERC noted that the transmission constraints appear unchanged in recent years. In 2014-15 when Tangedco tied up for 773 MW the inter-State price was ₹ 4.39 a kWh and ₹ 5.20 from within the state. In 2013, intra-State suppliers had bid ₹ 5.50 a kWh.

The deficit is estimated based on last summer’s all time high demand of about 13,775 MW last June and supply of a record 303 million units in one day in July.