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Discoms’ power purchase costs soften in first quarter

The government’s idea of cutting down power cost through efficiency improvement measures in the electricity value chain seems to be making an impact. State-run power producer NTPC Ltd. has cut its power tariff to distribution companies by up to 50 paise per kilo watt hour across regions.As per data from the power ministry, the biggest beneficiaries of NTPC’s tariff reduction are distribution companies in the states of Delhi, Chandigarh, Himachal Pradesh, Telangana and Jharkhand, where tariffs came down by between 33 paise and 50 paise in the April-June period of 2016 from a year ago. An executive with the state-run utility, who asked not to be named, said the reduction was possible because of efficiency improvement measures such as changes in coal logistics. NTPC’s average tariff came down by 15 paise to Rs.3.04 a kilowatt/hour in the April-June quarter from a year ago and is set to further come down in the current quarter, said another official, who also asked not to be identified.

A reduction in power purchase cost is likely to help in boosting power demand from state-owned distribution companies that are struggling to meet the full energy demand of customers due to their financial difficulties. Debt-ridden state power distribution firms are now making an effort to turn around under the Ujjwal Discom Assurance Yojana approved by the union cabinet last November, under  state government.