SEBs strike it rich selling surplus power

The deficient rainfall in the summer months of 2004, and the subsequent high demand for power in agriculture in the northern region, have meant that state electricity boards (SEBs) and transmission companies (transcos) have found a new way to make money "" supplying surplus power to the grid.

With SEBs and transcos increasingly going in for state-to-state trading of power among themselves, trading companies are faced with a shortage of supplies.

Delhi, Uttaranchal, West Bengal, Orissa and Goa are among the states whose SEBs and transcos have made money by supplying surplus power to the grid this financial yaer. Delhi, for instance, has made about Rs 300 crore by trading in power, while West Bengal is estimated to have made about Rs 600 crore.

Objections have, however, been raised, over the sale of power by SEBs outside the states.

"This involves making profits at the cost of domestic consumers. A number of these SEBs are getting power from the central pool and if they are unwilling to supply to consumers within the state, they should surrender it, rather than sell it to make money," said a sector expert, speaking with reference to states like Uttar Pradesh and West Bengal.

There have also been allegations that in some cases, states are resorting to unscheduled power cuts and not supplying to consumers and in other cases overbooking power so that they could supply the balance to the grid, and in the process, make money.

The CERC, however, is of the view that it is a matter between the state regulators, electricity board and the consumers. The body also feels that since it is a market mechanism, states have to learn to play the markets.

"If a state electricity board has to suffer losses by supplying to consumers who are not likely to bear the full cost of power while it can make money by supplying to another state, which is short of power, it is free to do so," said a CERC official.

Delhi, with net receivables of over Rs 600 crore on account of unscheduled interchange (UI), that is, drawal of power for which states have not made advance bookings, in the current fiscal, has entered into long-term bilateral contracts with suppliers of power for which it has paid in the range of around Rs 300 crore.

Also, Himachal Pradesh and Uttaranchal have hydro power which is the best source of meeting peak demand. It is possible that the state is supplying power to the grid when frequencies are low and demand is high and making money in the process, said CERC officials.

The net result has however been that SEBs have wisened to the availability of a new source of raising money while power trading companies have lost out in terms of market share.