Lower rates, open access draw industrial units to IEX for power

The number of industrial consumers taking advantage of open access provisions to buy power on the IEX, the country's largest power exchange, more than quadrupled during 2010-11.

Rock-bottom price quotes and the relative ease of striking deals on the day-ahead market on the IEX has prompted these players, mostly small and medium industrial units from Tamil Nadu, Punjab, Haryana, Rajasthan and Madhya Pradesh, to make a beeline for the bourse.

The open-access provision is a key reform measure ushered in by the Electricity Act 2003 under which consumers of electricity, starting with big industrial units with a load of 1 MW and above, can buy power from a utility of their choice, either from inside the State or outside .

As of end March 2011, a total of 825 open access (OA) consumers were procuring part of their power requirements through the IEX, up from 178 in the beginning of the year, according to data compiled by the Central Electricity Regulatory Commission. Tamil Nadu, which is going through an acute electricity shortage, accounted for 430 of these consumers, followed by 284 units from Punjab, according to data from IEX. Volumes clocked by OA consumers as a percentage of total volume transacted in IEX has gone up dramatically – starting with mere 2.8 per cent in April 2010 to 37 per cent by the end of the year in March 2011.

The data shows that the industrial consumers are more price-savvy that the other players such the State Electricity Boards and other power distribution firms active on the bourses. In 2010-11, the weighted average price of electricity bought by OA consumers on the IEX was lower (Rs 2.72/kWh) when compared with the weighted average price of total electricity transacted through IEX (Rs 3.38/kWh).

The number of OA consumers as a percentage of total number of portfolios in IEX has steadily gone up from about 80 per cent at the beginning of the fiscal in April 2010 to about 95 per cent at the end of the year in March 2011, procuring a total of about 4,056 million units (MU) of electricity on the bourse through the year.

On PXIL, the second operational exchange, about 155 Open Access Consumers were procuring part of their power requirements, according to CERC data till March 2011. These consumers were also mostly from Tamil Nadu, Punjab and Rajasthan.

In Tamil Nadu, firms such as the Rs 500-crore Chennai-based Suryadev Alloys, Madras Cements, Sri Ramalinga Mills and Seshasayee Paper and Boards Ltd are among the regular buyers on the IEX. Up north, industrial units from the sports goods hub of Jallandhar and cycle parts cluster of Ludhiana are among those looking to buy on the bourses and avoid coughing up the Rs 5.80 a unit industrial tariff in Punjab.