Discoms leverage RTM to buy power at lower cost

Officials purchased power at prices as low as 10 paise per unit

Published: 03rd June 2020 08:08 AM  |   Last Updated: 03rd June 2020 08:08 AM   |  A+A-


For representational purposes

By Express News Service

VIJAYAWADA: Leveraging the Real Time Market (RTM) kick-started by power exchanges, Indian Energy Exchange and Power Exchange India Ltd, the State power distribution companies (discoms) are preparing to purchase power at lower costs to bring down the overall expenditure on power procurement. 
On the first day of the RTM, which started on Monday, the State officials purchased power at prices as low as Rs 0.10 (10 paise) per unit in some blocks of the auction.

As initial trends showed that the rates are considerably lower than the day-ahead market (DAM), officials expect to see significant savings in procurement of power. The State discoms purchased about 25.035 million units (MU) at an average price of Rs 1.58 per unit on Monday and 22.735 MU on Tuesday. The permitted average power procurement cost per unit as approved by the AP Electricity Regulatory Commission is Rs 4.68. When contacted, joint managing director of APTRANSCO KVN Chakradhar Babu explained that the rates fell much lower than the DAM on the first day of RTM. 

“The average overall cost was Rs 1.58 per unit. It is still new, but we are closely observing the trends to leverage RTM to pragmatically bring down the power procurement costs,” the JMD told TNIE. The department officials also noted that the RTM, besides effectively helping in managing last-minute demand variation, is also expected to reduce dependence on deviation settlement mechanism (DSM), one of the major problems faced by the discoms.

While in the day-ahead market, participants, including discoms and other users purchase and sell energy at financially binding day-ahead prices for the following day, Real Time Market enables buyers/sellers to make a transaction an hour before the delivery. The real time market is designed to be a half-hourly market with 48 auction sessions of 15 minutes each. The sessions will be conducted even in time blocks of an hour, with delivery commencing an hour after closure of the session, the power exchanges said.

Meanwhile, the officials are also continuing procurement from day-ahead market as it is much lower than the average power generation cost. For Wednesday, the utilities executed a bid for 6.725 million units (MU) at Rs 1.82 per unit. “We executed the bid for 6.725 MU as a part of our daily planning to meet the crucial requirement. We will purchase the balance requirement from RTM,” Chakradhar Babu, who is closely monitoring the trends, explained. 

It may be recalled that the State energy department, on Sunday, issued a statement that it has saved Rs 700 crore by procuring cost-effective power. “About Rs 230 crore of it was saved by purchasing 3,081.53 MU from exchanges in the 2019-20 financial year,” the statement read.


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