The Hindu Business Line : Power trading platform gets regulatory nod

Energy trade
The power exchange is India’s first.
FTIL will provide licensed software; MCX, expertise in operation management.
Exchange will enable participants to trade electricity through hourly contracts, block contracts.
PTC India,Tata Power also eyeing possibility of picking up equity stake.

Anil Sasi

New Delhi, Sept. 2 The decks have been cleared for the country’s first power exchange, with a proposal put forward by Multi Commodity Exchange of India Ltd (MCX) and Financial Technology India Ltd (FTIL) to set up a nationwide power trading platform getting the regulatory nod.

The Central Electricity Regulatory Commission (CERC) on Friday granted an “in principle” clearance to the MCX-FTIL led venture, called Indian Energy Exchange Ltd (IEEL), where players including trading major PTC India Ltd and Tata Power Ltd are also understood to be eyeing the possibility of picking up equity stake, sources said.

PTC is looking at up to 26 per cent stake in the venture, in which FTIL would provide the licensed software and MCX the expertise in operation management.

Contract kind

The proposed Exchange would broadly enable participants to trade electricity the subsequent day through standard hourly contracts and block contracts that commit them to injecting into or drawing power from the grid a volume of electricity at a given hour at a market price.

It would start as a platform for scheduled ‘day-ahead’ trading of electricity, under which contracts for trading would be firmed up the preceding day within a given time frame. All settled trades shall be compulsorily advised to the concerned Regional Load Despatch Centre for being scheduled, subject to transmission capacity availability.

The regulator has, however, kept the proposal for continuous trading platform after the closure of day-ahead window in abeyance for the time being.

Members could include entities that are commercially active in trading electricity, distribution licensees, generators, consumers, and other stakeholders. The broad time-line for trading on the Exchange involves receipt of bids for trading between 10 a.m. and 12 p.m. the preceding day.

Trade schedule

The trade schedules shall be released by the Exchange to the National or Regional Load Despatch Centres by 3 p.m., which would then be accommodated to the extent possible and incorporated in the net schedules issued by the Load Despatch Centres at 5 p.m. the preceding day.

While as per the application, FTIL and MCX together or FTIL alone proposes to hold 51 per cent of the venture, the CERC has said that at least 51 per cent of the equity should be held by the public, other than the shareholders having the trading rights in the Exchange.

The regulator has also stated as “desirable” the “diversified” participation within the trading and non-trading groups in order to discourage monopoly

Operator clause

The CERC had, in February, issued guidelines for grant of permission to operators wanting to set up and operate power exchanges in the country.

Without stipulating a cap on the number of exchanges that can be set up by prospective players, the regulator had broadly prescribed the need for a clear ring-fencing between ownership, management and participation in the proposed power exchange and the requirement for an efficient financial settlement and guarantee system.

An NTPC, NCDEX-led venture has also filed its proposal before the CERC for operating an Exchange.