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The Central Electricity Regulatory Commission (CERC) has asked the power exchanges to cap the bid price range to Rs 12 per kWh for the 'Day Ahead Market' (DAM) and 'Real Time Market' (RTM) segments.

The CERC has directed the power exchanges to re-design the bidding software to allow bids in the price range of Rs 0-12 per kWh.

As per the Commission, power exchanges have designed the bidding software in such a way that members can submit their bids in the price range of Rs 0-20 per kWh.

"The Commission in exercise of powers under Regulation 51 (1) of PMR 2021 directs the power exchanges until further orders to re-design, with immediate effect, the bidding software in such a way that members can submit their bids in the price range of Rs 0 per kWh to Rs 12 per kWh for DAM and RTM," CERC said in an order dated April 1.

"The Commission is of the view that this price moderation will be in keeping with the present market realities and shall not have any significant impact on the volume transacted and safeguard the consumer interests."

According to the Commission, the prices discovered at the power exchanges have remained significantly high during the last few days.

"The factors like rise in temperature causing early onset of summers and increase in economic activities with lifting of Covid-related restrictions, have contributed significantly to the increase in electricity demand," it said.

On the other hand, it cited that increase in supply has been limited.

"The situation has been further aggravated due to geo-political factors affecting the fuel supply and certain domestic supply constraints. This has widened the gap between demand and supply, with average buy to sell bid ratio reaching more than 2 and market clearing price (MCP) frequently touching Rs 20 per kWh.

"Needless to say, such abnormally high price, even for a short period, without any significant impact on increase in supply is not only against consumer interest, but also erodes the buyer's confidence in the market's credibility."