CHENNAI: With short-term power demand and procurement costs expected to rise across the country due to the impact of El Nino, Tamil Nadu Power Distribution Corporation Ltd (TNPDCL) has invited bids to procure 3,000 MW of electricity under medium-term agreements for five years from March 2027.

The move comes after the utility struggled to secure adequate supplies through short-term tenders amid high prices and poor response from generators. After rejecting or cancelling its first four short-term tenders, TNPDCL received bids ranging from Rs 9 to Rs 20 per unit in its fifth tender, which restricted eligible supply to coal-based thermal power plants.

The medium-term procurement plan, however, faced objections before the Tamil Nadu Electricity Regulatory Commission (TNERC) over compliance with Resource Adequacy Regulations. when its petition came up for hearing on October 6, the utility had sought permission to procure 1,500 MW from March 1, 2027, but subsequently increased the proposed quantum to 3,000 MW.

S Gandhi, president of PESOT, questioned the reasons for the increased procurement and sought clarification on its compliance with the Resource Adequacy Regulations. Following his objections, the commission, on November 5, directed TNPDCL to submit details of its Resource Adequacy Plan, existing power procurement arrangements, the status of ongoing projects and any litigation concerning the implementation of power projects.

At the next hearing on November 12, the commission allowed TNPDCL to proceed with the tendering process after the utility filed an additional affidavit. Gandhi told DT Next that he had not been given a copy of the additional affidavit and had been asked to submit his comments at the next hearing on November 17.

Meanwhile, Energy Resources Minister R Nirmalkumar said TNPDCL had decided to procure power at the lowest quoted rates for each month between January and June 2027 under its fifth short-term tender. The selected rates are Rs 13 per unit in January, Rs 9.50 in February, Rs 10 each in March and April, Rs 9.95 in May, and Rs 13 in June.

The tender, floated on November 1 for round-the-clock supply between January 18 and June 15, attracted bids ranging from Rs 9 to Rs 20 per unit. However, the response fell significantly short of the utility's requirements. The utility received just 81 MW against 2,000 MW sought for the second half of January and 1,381 MW against 3,000 MW for February. Offers met only 7.2% of the requirement for the first half of June, with generators offering 181 MW against 2,500 MW sought.

The shortfall assumes significance as the state's projected evening peak power deficit is expected to rise from 1,388 MW in January 2027 to 5,544 MW in April. The deficit is projected at 3,987 MW in May and 4,796 MW in June.

Separately, TNPDCL has floated a tender to appoint a consultant to formulate its long-term power procurement strategy. The consultant will assess future demand, existing and proposed procurement arrangements, generation capacity additions and retirements, transmission availability and the cost of different procurement options.

TNPDCL currently procures 2,830 MW from 11 generators under long-term agreements. Contracts with nine generators expire on September 30, 2028, while agreements for the remaining two, accounting for 708 MW, end on March 31, 2029. The minister has also announced plans to float a fresh long-term power procurement tender, the first such initiative since 2014.