DNA Money Edit: Power rates stay firm amid festival

Higher electricity demand, coal shortage, lower wind and hydropower generation have kept electricity prices higher. Average spot power price at Indian Energy Exchange (IEX) rose 45.5% in October at Rs 5.94 per unit over Rs 4.08 per unit in the year-ago month as IEX witnessed highest ever sales volume of 7,125 million units, an increase of 63% compared to same period in 2017.

However, delay in the arrival of festival of lights this year – Diwali falls on November 7 as against October 19 last year -- has surely helped spot power prices cool down a bit, thanks to the onset of early winter this year. Heat isn't at its peak now with the first snowfall happening in the Himalayan ranges in J&K and Himachal Pradesh last weekend. During last Diwali, spot power prices had touched a three-year high of Rs 10.80 per unit. However, post-Diwali last year the average market clearing price dropped to Rs 3.55 per unit in November. On Monday, peak per-unit price stood at Rs 4.79.

The government needs to sort out coal supply related issues and ensure uninterrupted supply of the feedstock to bring down electricity prices. Given that energy produced by wind and hydro modes have dipped and pushed demand on spot exchanges, the electricity rates are likely to remain firm.