It is now three times in running, the New Year has started with power generation going down from a year ago. January 2025 electricity generation numbers are out depicting a 1.5 percent year-on-year decline, which may not sound a great deal at first. When viewed in the context of an already low base and the presence of a lucrative winter incentive consumption package – it starts to appear as a rather worrisome picture.
On a cumulative basis, the grid power generation at 72 billion units during 7MFY25 is the lowest since FY20 and barely at par with FY20. January’s generation at 7.8 billion units is also the lowest since FY21 and very close to levels seen seven years ago.
The 12-month moving monthly average does not instill much hope either – with generation barely holding at 10 billion units – lower than 4 percent year-on-year and 13 percent lower than the peak of 11.6 billion units back in May 2022. It has now been well over six years since the 12-month rolling average generation first breached the 10-billion-unit threshold. The countrywide mean and median temperatures for daytime and nighttime have stayed close to the warmest in recorded history, which makes the numbers look even more depressing.
The power generation mix today is much improved from the horrors of yesteryears, and adequate tariff assumptions have also helped keep the monthly adjustments in check. The actual generation stayed 4 percent shy of reference generation, for the second month running. The most noticeable positive deviation came from Thar coal contribution, with actual generation 37 percent higher than the reference. The other significant factor was much-reduced reliance on furnace oil-based power – which has historically been the fuel of choice in January. January 2025 saw a paltry 109 million units of furnace oil – the lowest in more than a decade, as other fuels such as RLNG, for various reasons, had a better availability than many previous winters.
For the seventh month running, monthly Fuel Charges Adjustment (FCA) sought expectedly stayed in the negative. The average fuel cost for generation during January 2025 at Rs11/unit stayed 25 percent lower year-on-year. The deviation from reference fuel charges comes close to Rs2/unit which is the highest negative adjustment sought in two years. The base tariff revision last year meant the reference fuel charges for January 2025 went up 74 percent from the previous base – and should be read in this context. With the upcoming quarterly adjustment to be also in the negative zone, for the first time in recallable memory, the continuous respite in monthly FCA surely offers a much-needed breather to consumers who are still clearly struggling to develop more use cases for electricity at prevalent rates.
Stable currency and stable international commodity prices have helped a great deal in shielding consumers from tariff increases in the past few months. With summers expected to arrive sooner, the authorities need to get their act together to ensure the transmission system horrors of yesteryears are not repeated. It is also imperative distribution companies adhere to the rules of the game and stop commercial load-shedding to hide inefficiencies.
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