Power regulator amends trading licence regulations

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January 4, 2020 4:08 AM

CERC has also allowed the inclusion of ‘banking transactions’ within the purview of trading activities, and, has revised the definition of ‘banking of electricity’ to accommodate banking through trading licencee.

Power regulator, CERC, electricity transactions, Trading Licence Regulations, power exchangesThe power regulator has set the upper limit of margins that traders can charge for the electricity transaction.

In the wake of growing volumes of electricity transactions being executed through power traders, the Central Electricity Regulatory Commission (CERC) has amended the “Trading Licence Regulations”. The power regulator has set the upper limit of margins that traders can charge for the electricity transaction. “For transactions under short-term contracts and contracts through power exchanges upto one year”, the trading margin has been set as 7 paise/unit. For contracts where escrow arrangement or letter of credit is not provided by the trading licencee in favour of the power generator, the maximum margin has been set as 2 paise/unit.

CERC has also allowed the inclusion of ‘banking transactions’ within the purview of trading activities, and, has revised the definition of ‘banking of electricity’ to accommodate banking through trading licencee. The regulator has also revised the definition of “back to back contracts” as stakeholders pointed out that such deals are never simultaneous, or, even successive and the payments from buyers in such transactions are often delayed.

‘Back to back contracts’ shall mean the contracts for inter-state power deals in which a trader buys a specific quantity of power for a particular duration from one party and simultaneously sells it to another party on similar terms. These shall include the contracts, wherein the parties specifically agree that they are back to back in nature.

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