3.2.2 Supply
Unexploited hydro potential is primarily concentrated in the North and the North East and Coal, primarily, in Central and Eastern India. Since domestic resources of gas and oil are limited these energy resources need to be imported. There is considerable potential for the import of hydropower from Nepal and Bhutan and the import of gas or gas based electric power from Bangladesh.

3.3 Products

The Indian market for power is relatively nascent and underdeveloped. At the central level even the primary distinction between generation capacity and energy supply is yet to be defined through a suitable two-part tariff. This unbundling of generation services has however been given effect to in the case of IPPs. Other products like reactive power, black start facility and spinning reserve or emergency power are not priced separately today. In transmission also no distinction is made between availability of capacity and transmission of energy. Individual transmission lines are not priced separately. In states no distinction is made between transmission and bulk supply. Distributors pay a bundled price for the supply of bulk power to the monopoly transmission utility, comprising the cost to this utility of purchasing bulk power from generators and its own transmission charges. Similarly retail consumers pay a bundled charge to the distributor, comprising the cost to the distributor of purchasing bulk power from the monopoly transmission utility, its own distribution charges and the cost of metering, billing and getting payments from the retail consumer. Ancillary services like customer's load management, special services for interruptible loads (switching advice to local non-conventional generation resources at peak load period), energy counseling etc. are unknown.

3.4.1 The uneven spread of primary energy resources and the relatively well endowed status of neighbouring countries like Nepal and Bangladesh create the potential for trade in power. India already imports power from Bhutan while initiatives are in place also in the case of Nepal. India can similarly be attractive market for gas or power or both from Bangladesh. More immediate possibilities for trade present themselves in the domestic market. The table below highlights the regional variations in the demand and supply gap existing today.

Table: Regionwise, Ownershipwise capacity and energy supply

3.4.2 The energy surplus in the Eastern region (surplus period of Eastern and North-Eastern regions together is 60.7% with over frequency beyond 51Hz.), the emerging surplus in the Western Region and the prevailing shortages in other regions provide a ready opportunity for trade in power. Even at a future date when shortages will not constrain demand in any region, opportunities for trade will present themselves due to the diversity of demand patterns across states. Variations in rainfall patterns, temperature, lifestyles and load profile provide opportunities for the surplus capacity at off peak in one region to meet peak or "shoulder" demand elsewhere. The primary constraint today is the non-availability of transmission capacity and the credit worthiness of the buyers. Despite these constraints bilateral trades do take place between states within a region and across regions. It is estimated that around 5% of the total energy supplied is traded. With the growth of regional grids this trend will increase. POWERGRID intends to increase its transmission capacity to 70,000 MW by 2012. This will represent around 29% of the estimated national generating capacity of 2,38,000 MW at that time.

3.4.3 International experience suggests that trading can evolve either between integrated utilities, as in the case of the US, or as a consequence of the unbundling of the sector with open access to transmission. Trading between integrated utilities has been taking place since 1996/97 in India also as a result of SEB's selling surplus power commitments to other SEBs. The open access model is also simultaneously in place. Central generators have been using the inter-state transmission facilities of POWERGRID and sometimes even the transmission facilities of an SEB to sell power to other SEBs. More recently the establishment of the Power Trading Corporation has heralded the entry of bulk power marketers who will buy power from generators and sell it to distributors. An informal or formal pooling arrangement has yet to develop. Till now short-term trades are "brokered" through the medium of the REBs, which being a comprehensive stakeholder group, bring surplus and deficit states together and ensures that transmission access would be available for the transfer. As the RLDCs gradually take over the task of operational control of real time operations, they could also execute this task. However, the composition of the REB forum is clearly favourable for its evolution into a forum for settlement of short-term trades. In the longer term, PTC, which would have gained experience in inter-regional sale of power, may become the appropriate vehicle for the establishment of a power pool for the settlement of short and long-term trades.