On power exchanges,industries get cheap and plentiful supply

This is also the result of states lowering the bevy of protectionist barriers that they had erected to stymie the implementation of key reform provisions of open access promised in the Electricity Act 2003,under which consumers are enabled to migrate to suppliers of their choice or a generation unit can sell surplus power to a consumer of its choice.

With the exception of Jharkhand,Uttar Pradesh,Bihar and Delhi that still do not allow open access,most other states,notably Andhra Pradesh,Tamil Nadu,Gujarat,Punjab,Rajasthan and Haryana have actively allowed this,and account for the maximum number of industrial consumers transacting on the PXs.

For instance,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 Jalandhar and cycle parts cluster of Ludhiana are among those transacting on the bourses to avoid coughing up the industrial tariff of around Rs 6 a unit in Punjab.

Of the record volume clocked on Sunday,the countrys largest power exchange IEX accounted for 117.4 MUs while PXIL,the other exchange,contributed volumes of 2.8 MUs.

On the IEX,major state utilities buying power are Rajasthan,UP,Maharashtra and open access customers (largely industrial units in states such as Punjab,Tamil Nadu and Andhra Pradesh) contributing to about 60 per cent of volumes.

The purchases on the IEX by open access consumers as small as 100 kW and as large as 300 MW in August 2013 was about 80 per cent of the total market. Currently,there are 2,300 entities registered with IEX on its Day-Ahead market,out of which over 2,000 are industrial consumers,commercial complexes,ITeS establishments and educational institutions.

The short-term power market,involving trades spanning a time-frame of one year,comprises just around 11 per cent of the total energy generated in the country. Till recently,over-the-counter (OTC) deals or trades that happen outside the PXs on a bilateral basis between utilities or through traders dominated the transactions through the bourses.

One of the key reasons for the PXs gaining favour over the traders is the lower electricity prices discovered on the two operational bourses IEX and PXIL.

As per latest CERC market monitoring report,in the year 2013,the overall short term market has increased by 4 per cent and PX volumes have increased by more than 60 per cent. While the two key reasons for increasing volumes on PXs have been transparency in transactions and payment security to sellers (daily payment cycle and no open ended risks to sellers with much higher level of competition pulling down the prices),the deals have been spurred on by exceptionally low market clearance price for electricity this summer in comparison to prices over the same time in the last five years.

The average market clearing price (MCP) the price discovered by the PX before accounting for any constraint in the transmission corridor in August plunged by 10 per cent to Rs 2.05 per unit from Rs 2.28 per unit in July.