NEW DELHI: Indian power regulator has proposed uniform price discovery through pooling of bids across power exchanges for optimal utilisation of transmission system besides stringent rules for electricity markets, including keeping a check on transaction fee of bourses.
The industry, however, said stringent regulations and unnecessary interventions by regulatory commisson will impede deepening of electricity market in the country, which has just begun to evolve. It said regulator’s interventions pose questions on free-trade concept.
The Central Electricity Regulatory Commission (CERC) on Saturday issued elaborate draft power market regulations 2020, which provide for a new concept called ‘Market Coupling’, meaning a process of collecting bids from all the power exchanges and matching them to discover a uniform market clearing price. The job will be carried on by a ‘Market Coupling Operator’, an entity to be notified by the regulator.
“This is just an enabling provision for optimal utilisation of transmission corridors and the surplus capacity. Market coupling is prevalent in Europe,” said a person in know of the development.
The draft, supposedly lengthiest of all CERC regulations, has also proposed to allow long-term future contracts on power exchanges by doing away with the current 11 days restriction.
The regulator has also sought to keep in check the quantum of transaction fee charged by power exchanges. “No power exchange shall charge transaction fee exceeding such fee as approved by the commission,” the draft said. Operational power exchanges will be required to obtain approval of the transaction fee within three months of notification of these regulations, it said.
“As things are evolving, depth of markets is increasing,” said the person quoted above. “The RTM markets have picked up very fast and the markets will see addition of new products soon. The draft was under deliberation since long and has been brought out timely for all checks and balance. The role of regulator becomes all the more important when the markets become deep. The draft has enabling provisions covering everything for balancing the interests of public at large.”
The regulations come in the backdrop of the power ministry’s order 10 days ago allowing electricity to be traded as other commodities with forward contracts and derivatives on exchanges.
The order settled decadelong jurisdictional spat between CERC and the Securities & Exchange Board of India (Sebi). Now, deliverybased long-term contracts are likely to be traded on power exchanges under CERC’s jurisdiction, while the derivative contracts are likely to be traded on commodity exchanges under Sebi. The order has asked both regulators to take appropriate measures for introduction of the futures contracts.