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: The Central Electricity Regulatory Commission (CERC), in a bid to fulfill the mandate of Electricity Act 2003, has started framing power market regulations. The meeting of the Central Advisory Committee of the commission, held on 6th July and attended by experts on the power sector and important stakeholders like trading companies, power exchanges and consumer organisations, had brought up the matter during their talks.
Pramod Deo, chairperson, CERC, said the commission had set a target of coming out with trading regulations within the next few months and would be undertaking several consultations before finalising them. The exercise would be to ensure the orderly development of power markets in India and mobilising new investments and promoting competition.
The committee supported the introduction of term-ahead contracts (weekly/monthly), along with more intensive monitoring, stringent disclosure norms and tighter grid discipline. The Indian Energy Exchange (IEX) and Power Exchange India (PXI) have already received the CERC's in-principle approval for the introduction of term-ahead contracts. However, both the power exchanges have been asked to furnish details on the pricing mechanism.
A CERC release said it was also suggested that capacity contracts (as against the currently available energy contracts) need to be made available for longer terms, keeping in view the uncertainty of demand and attendant payment margin risks. The meeting was unanimous in suggesting the introduction of intraday contracts which would enable the sale and purchase of power on the day of the operation. This would facilitate better load management.
All the members of the committee favoured further tightening of UI (unscheduled interchange) mechanism in order to bring more liquidity in the power markets and inculcate better grid discipline among the constituents. It was also suggested that the utilities which persistently overdraw should be punished and debarred from participating in the markets.
The role of trading licensees, vis-ŕ-vis power exchanges, was also deliberated. A consensus emerged on the fact that trading licensees should also take up the role of standalone power suppliers to open-access consumers and if need be, the regulatory framework should be modified to provide for aggregation, both of sellers as well as buyers. This would mean that trading contracts need not be on a one-to-one basis and the trading licensees would have the freedom to aggregate the generators as well as consumers. Another major issue raised was the need of providing a level playing field between trading licenses and intermediaries participating in...
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