The Hindu Business Line : Power exchange: CERC yet to clarify on key issues

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Operational freedom to the power exchange within an overall framework.
The regulation would be minimal and restricted to the requirements of the essential for preventing derailment/ accidents and collusion.

Suresh P. Iyengar

Mumbai, Dec 4 Even as the power exchange initiative mooted by MCX and NCDEX is to become a reality, the Central Electricity Regulatory Commission (CERC) is yet to clarify on many key issues.

Allocation of transmission capacity to multiple power exchanges for trading is yet to be decided by CERC.

“If there are two competing power exchanges, how will the surplus supply will be divided between the two,” questions a company official.

Membership drive

MCX’s promoter Financial Technology, in association with Power Trading Corporation, recently launched a membership drive for the Indian Energy Exchange (IEX), while NCDEX, which joined hands with NTPC, is in the process of registering a new company.

As per the current set up, explained by MCX, there will a fixed quantity (surplus supply) of power made available by Power Trading Corporation, which handles supplies on the national grid.

Power exchange freedom

The CERC guidelines say, “The general approach of the Commission is to allow operational freedom to the PX (power exchange) within an overall framework. The regulation would be minimal and restricted to the requirements of the essential for preventing derailment/accidents and collusion. The commission shall keep away from governance of PX, which would be required to add value and provide quality service to the customers.”

Transmission charges

As of now, transmission charges are defined by the contract path given by the bilateral parties. “The power exchange being an anonymous platform, the contract path system would not work. Therefore, a uniform charge in rupees per MW per hour would have to be defined for all the exchange participants. The procedure for payment of these charges would also need to be defined,” another company official said. CERC is yet to notify scheduling and handling charges for the new set up.

Transmission losses are now defined by the contract path which has to be made explicit for transactions on power exchanges, he said.

MCX, which has started enrolling members, charges an admission fee of Rs 25 lakh, a deposit of Rs 25 lakh and collects an annual subscription of Rs 5 lakh.

MCX intends to levy a charge of one paisa a unit for the online transactions. It is four paise now for orders placed over phone.

“India, which has a total capacity of 1.26 lakh MW, faces 18 per cent deficit during the peak hours. Captive power production is about 40,000 MW, which mostly lies untapped due to lack of transparency in pricing. With the power exchanges bringing in the transparency in price discovery, captive power can be efficiently tapped,” said Mr Arvind Pal Singh, Assistant Vice-President of NCDEX.

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