CERC Cuts Ceiling Price For Power Trading, HP-DAM Peak Cut From Rs 50 To Rs 20/unit

The Central Electricity Regulatory Commission (CERC), in its latest suo-moto order has approved a reduction of the ceiling prices for different existing Day-Ahead Markets (DAM). It comes days ahead of the summer season when the peak demands are anticipated to escalate sharply, with the government making strenuous efforts to keep the lights on with a huge push from existing thermal capacities as well. 

The regulatory authority, in its order, has asked all the Power Exchanges registered under the Power Market Regulations 2021 to redesign their software to accept a bidding with the revised prices with effect from April 4, 2023. The earlier orders of CERC had allowed the members of DAM, except HP-DAM, to quote their prices anywhere between Rs 0/KWh to Rs 12/KWh. This price range was approved by the CERC on March 5 last year and extended multiple times. 

However, the latest order has revised the prices to Rs 0/KWH-Rs 10/KWh, reducing the ceiling price by Rs 2/KWh. The prices apply to all the DAMs, including-Green Day Ahead Market, Intra-Day, Day Ahead Contingency and Term Ahead, including GTAM and RTM. 

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Meanwhile, for the High Price (HP)-DAM, the earlier approved price range stood between Rs 0/KWh to 50/KWh. The new order has been revised it and put under the range of Rs 0/KWh to Rs 20/KWh. With this, the CERC reduced the ceiling prices under HP-DAM from Rs 50/KWh to Rs 20KWh, a reduction of Rs 30/KWh. 

The CERC, in its detailed order, has also cited the different reasons which propelled them to slash the prices. The regulator also said that this will give impetus to the prospective players to participate in the struggling HP-DAM.  

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Meanwhile, the CERC made the most significant ceiling price cut for the High Price Day Ahead Market (HP-DAM). It pointed out that this segment has had no trade since it was introduced. The Commission claimed that earlier, the higher prices for HP-DAM were approved, considering the higher cost of imported gas and coal. The CERC claimed that imported gas and coal prices have significantly reduced. While natural gas prices stood at USD 40/mmbtu in March 2022, they came down to as low as USD 13/mmbtu in March 2023. 

“With due regard to the emerging demand and supply scenario, the phenomenon of price formation in DAM as noted above and taking cognizance of the fact that the prices of imported coal and natural gas witnessed a significant reduction over the last few months, the Commission finds it expedient to review the existing price ceiling in DAM (including GDAM), HP-DAM, RTM, Intra-day, Day Ahead Contingency and Term-Ahead (including GTAM) Contracts traded at the power exchanges,” the CERC order said.