UPPCL not to sign pact for purchase of thermal power

| | Lucknow
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UPPCL not to sign pact for purchase of thermal power

Saturday, 03 August 2019 | PNS | Lucknow

Uttar Pradesh Power Corporation Limited (UPPCL) and its four subsidiary power distribution companies (discoms) will not sign any new power purchase agreement (PPA) with thermal power generating companies till December 2022. 

The state public sector undertaking (PSU) has taken this decision in compliance with directive of state power regulator UP Electricity Regulatory Commission (UPERC).

The UPERC has issued directive on this line on the ground that the UPPCL has failed to achieve its renewable purchase obligations.

The power regulator directed the UPPCL to sign new PPAs with renewable energy-based power sources, including hydro.

The discoms were also asked to invest in power storage technologies to meet spurts of peak demand which lasts for short durations.

The average power demand of the state is currently around 13,000 MW. During peak hours, it rises to 22,000 MW. UP’s contracted PPA capacity is around 18,134 MW (14,161 MW thermal, 3,016 MW hydro and 958 MW renewable).

Barring a few hours of peak demand, most tied-up thermal power capacity remains under-utilised. This is expected to cost the state Rs 4,797 crore as additional fixed charges in 2019-20. 

“Currently, it is mandatory for discoms to pay PPA-equipped generation units the capacity charge, roughly 45 per cent of the tariff, even if they do not use the power. The additional cost might go up to Rs 10,750 crore in 2022-23,” a UPPCL official said, adding that this translated into avoidable burden of Rs 0.44 per unit.

The state’s average power purchase cost (from non-renewable sources) in 2018-19 was Rs 3.73/unit, against the national average of Rs 3.60/unit.

By the end of 2018-19 fiscal, power demand in UP dropped by 1.6 per cent against corresponding period in 2017-18. The dip was starker in the first two months of 2018-19 with demand plummeting 6.6 per cent in January and 11.2 per cent in February.

This comes amid UP being the largest beneficiary of Saubhagya scheme connecting about 75 lakh households since October 2017.

The UPPCL attributed the fall in demand as a “result of transparent functioning and awareness of consumers for saving energy”.

However, sector experts attributed the fall in demand to movement of industrial consumers to open access and formalisation of unauthorised connections under Saubhagya.

The Union Power Ministry had earlier pointed out that sales migration through open access — where industrial consumers source power from avenues other than discoms — have been impacting discoms’ revenue as well as operations and power procurement planning.

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