Power sold at exorbitant rates during peak demand periods by generating companies have escalated prices, the Planning Commission today said.

“The cost of power sold by a number of power generating companies... particularly during periods of high demand, has been extremely high. It has resulted in huge jump in prices. There is a strong need to effectively tackle this problem,” the Planning Commission said, reviewing the progress of Integrated Energy Policy (IEP).

In a presentation on the IEP before the Plan panel meeting, chaired by Prime Minister Manmohan Singh, the Commission said that even though some States had the franchisee model “large areas remain uncovered and distribution losses are still very high at more than 30 per cent”.

Also it pointed out that loans on long-term tenure from Power Finance Corp (PFC) and Rural Electricity Corporation (REC) were still not available.

The IEP had recommended abolishing differential payment security structures for central power sector public sector undertakings (PSUs) and the private sector.

“Effective terms of loans available to power sector can easily be extended to 20 years. The government could seed the market for such instruments by encouraging PSUs such as PFC and REC to introduce such innovative financing instruments,” it had said