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Coal crisis: Centre warns states against selling power at high price on exchange

There is a fear that depleted coal stocks at power generation plants may lead to potential blackouts in some states. (AP Photo/File/Representative use)Premium
There is a fear that depleted coal stocks at power generation plants may lead to potential blackouts in some states. (AP Photo/File/Representative use)

  • 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 power ministry said

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Amid the ongoing coal shortage crisis in the country, the Ministry of Power on Tuesday 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.

The Centre has urged all states and UTs to utilise unallocated power of the central generating stations (CGS) to meet the requirements of their own consumers and not to impose load shedding or sell it in power exchanges at higher prices.

"It has been brought to the notice of the Ministry of Power that some states are not supplying power to their consumers and imposing load shedding. At the same time, they are also selling power in the power exchange at high price," a Power Ministry statement said.

"The states have therefore been requested to use the unallocated power for supplying electricity to the consumers of the State," the power ministry said in its memo.

Energy crisis deepens

This came amid reports of possible power disruptions in some states due to coal shortage and a sharp spike in global energy prices.

The Centre also acknowledged the fact that at present, the demand for coal-based power plants has increased. So, to maintain the continuous flow of power in every state, it said, "In case of surplus power, States are requested to intimate so that this power can be reallocated to other needy States."

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 Centre 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 shares surge to record highs in recent days.

Some Chief Ministers from across the country have flagged the power crisis that might arise in their respective states due to coal shortage in power generation plants.

Besides, Delhi, Punjab and Chhattisgarh, the chief minister of Andhra Pradesh, YS Jagan Mohan Reddy, wrote to Prime Minister Narendra Modi to complain about the rising prices on exchanges, which he said, had trebled to 15 for a unit of power from mid-September to 8 October.

CM Reddy asked for an increase in the supply of coal, according to a copy of his letter, reviewed by news agency Reuters.

Day-ahead prices of power at Indian Exchange have surged to 20 rupees a unit, as per its website on today.

Earlier on Saturday, Delhi CM Arvind Kejriwal warned of a power crisis because of the coal shortage that has already brought electricity cuts in some eastern and northern states.

The power ministry has directed NTPC and Damodar Valley to ensure supplies to the capital's distribution companies.

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