CERC amends its cross-border trading norms

Written by Sanjay Jog | Mumbai | Updated: Feb 24 2009, 06:05am hrs
The Central Electricity Regulatory Commission (CERC) has amended its trading regulations after the ministry of external affairs (MEA) argued that any attempt to dilute its control mechanism on international trade in electricity would adversely impact national and strategic interests.

MEA said the cross-border trading in electricity with special treaty countries like Bhutan and Nepal is not covered under the provisions of the Electricity Act and it falls within MEAs purview, which is responsible for prescribing the terms and conditions of such transfer of electricity as the act does not apply beyond the territory of India. MEA thus suggested omission of the clause includes electricity imported from or exported to any other country for resale and recommended to provide that cross-border transactions will be governed by the MEA notifications.

As an alternative, MEA suggested appropriate provision to be made in the regulations to the effect so that concurrence of MEA is obtained before granting licence for import and export of electricity. Interestingly, MEAs views were supported by the power ministry and filed its submission to the CERC. Moreover, PTC India, the leading power trader with a market share of over 60%, said electricity imported or exported to any other country should not fall under the purview of the CERC.

Based on these objections, CERC modified the definition of inter-state trading as inter-state trading means transfer of electricity from the territory of one state for resale to the territory of another state and includes electricity imported from any other country for resale in any state of India.

Meanwhile, CERC clarified that the proposed regulations are not intended to regulate import or export of electricity per se or grant licence for those purposes. The scope of these regulations is to lay down the procedure for granting licence for trading of electricity within the country, specify the duties and obligations of the electricity traders and some other incidental matters.

According to CERC, these regulations are intended to regulate electricity trade after the stage of import, by subjecting the electricity imported to the regulatory jurisdiction of the CERC to achieve the objects and purposes of the Electricity Act. The act defines purchase of power for resale thereof and does not specify that both, purchase and resale must be within the geographic limits of the country.

Further, CERC admitted the act does not envisage grant of licence by it for export of electricity and therefore export of electricity needs to be excluded from the definition of inter-state trading.