NTPC's Merchant Power Plants

It is heartening to note that NTPC plans to quickly strengthen their balance sheet using the Merchant Plant route. These plants when they come on to the Grid, a National Power Exchange will be functional as envisaged by CERC. In the Draft paper on Power exchange published by CERC, the Prices are to be discovered using the Double side Bidding process where, the aggregated demand at different prices is matched with Supply Prices quoted by Power Producers, for different quantum. Such a system as the paper very correctly points out, will minimise market manipulations, by providing equal say to both the Buyers and Sellers. It is therefore expected that the tariff of the Merchant Plants of NTPC will be discovered through such transparent Double Side bidding process and not determined by the penal rates of Unscheduled Interchange which it seems is their current expectation.

Another factor which one needs to keep in mind is that these Merchant Plants are planned on the balance sheet of NTPC and NTPC assets are built by all the Distribution companies and the erstwhile electricity Boards. It is but natural that the Distribution licensee (or Electricity Boards) while willing to accommodate certain level of competition(read higher prices), expect that the prices are either discovered through the Power Exchange in a transparent manner or guided by the well founded tariff setting principles, including the competitive route. This is especially applicable for the large Hydro stations which are being named as Merchant Plants, where the benefit of lower tariff should not be blocked to all the stake holders, in the interest of one company.