Indian power regulator retains price cap at electricity exchanges

Labourers work next to electricity pylons in Mumbai

NEW DELHI (Reuters) - India's power regulator on Wednesday retained a price cap of 12 rupees ($0.1450) per unit on electricity traded on its spot power exchanges ahead of expected record energy demand in the coming summer months.

The Central Electricity Regulatory Commission (CERC) issued the order on Wednesday for extended retention of the ceiling "until further orders", citing consumer interests. The move could effectively keep costlier imported coal and gas-based power generation out of the spot market.

The CERC had lowered the price ceiling on power exchanges in April, from 20 rupees a unit, in light of desperate buying by state electricity companies to meet surging summer demand.

The order was extended twice and was to expire on Dec. 31. The Indian Energy Exchange and unlisted PXIL are the two main power exchanges in India.

"Energy requirement and peak demand remained higher in 2022-23 and the trend is likely to continue in the coming months," the CERC order said, adding that peak hour demand for 2023-24 is projected to be 230 GW, against 215 GW so far in 2022-23.

Industry sources expect the cap to remain in place indefinitely because there will be a separate market segment without a price cap. That new segment on the country's power markets would include costlier electricity from imported gas and coal-based power stations.

($1 = 82.7650 Indian rupees)

(Reporting by Sarita Chaganti Singh; Writing by Shivam Patel; Editing by David Goodman)