DNA Money Edit: Power demand needs to be managed well

After a costly September, power prices seem to be cooling off on the back of the onset of winter leading to lower demand for power, especially in northern and western states and, more importantly, improvement in availability of coal with thermal power generators.

The average Market Clearing Price at the India Energy Exchange in November declined to 40% to Rs 3.59 a unit from Rs 5.94 per unit in October. This is in stark contrast to September when spot power price witnessed an unprecedented jump to Rs 4.69, up 41% over the August spot price of Rs 3.34.

Coal stocks with power plants have improved with data for November 29 showing a stock for 8 days at 12.85 million tonne as against six days of inventory, or 10.1 million tonne, a month back. This improvement in stock position has come partly from higher imports of thermal coal.

Despite rise in demand, power generation has kept pace. As per Central Electricity Authority data, thermal power generation was up by a sharp 10.67% during October on year at 87.97 billion units.

The significant growth in power demand is always welcome which signifies heightened economic activities and general well being of the citizens of a nation, even discounting the seasonal demand for electricity needed to run air conditioners. But that demand should have to be managed well otherwise it would occasionally lead to surge in the short-term prices or scarcity of coal, the key ingredient, leading to occasional outages.