On February 7, 2007, the CERC (Central Electricity Regulatory Commission) issued its guidelines to establish and manage the national power exchange, a long-awaited venture. The CERC has allowed the operational liberty to power exchange within the realms of overall regulatory structure and has opened the doors of power exchange for private sector also.
"The participation in the power exchange will be voluntary and no existing power purchase agreements and bilateral contracts will be disturbed," said A K Basu, Chairman, CERC in news reported by the Times of India.
The modus operandi of power exchange will basically be like commodity exchange. A power exchange will give a platform to electricity buyers, traders, and sellers to cut the forward and spot deals. Currently, the country’s capacity for inter-regional transfer of power stands at approx 6,000 MW and it is predicted to rise to around 9,500 MW in next few years.
The ongoing work on installing transmission capacity for inter-state large size projects is expected to further give an upward push to the capacity of inter-regional power transfer. The CERC strives to promote the exchange to come out as market-based foundation for extending price risk management and price discovery to traders, distribution licensees, generators, consumers, and many other stakeholders.
As per the guidelines, promoters will have to build up model exchange of their own. They will be given the freedom to build, manage, and operate the exchange in accordance to approved rules, procedures, and by-laws.
Those who have shown their interest in establishing the power exchange are Vidyut Vyapar Nigam Ltd., Power Trading Corp. of India, State-owned National Thermal Power Corp., and National Commodity and Derivatives Exchange Ltd.
Basu informed the CERC was likely to have more than one power exchange by 2007-end.
Presently, India has no such power exchange and power is trade bilaterally at mutually decided rates. According to the RNCOS report “Indian Power Sector (2006)”, the failure of Indian states to put the reforms and regulations into practice has resulted in an air of uncertainty in the Indian power industry.
The market research report focuses on power generation and consumption scenario in all the important Indian states with detailed statistical data on power distribution and transmission. An in-depth analysis of power infrastructure, government initiatives, FDI, overview of ultra mega projects, and role of private sector has also been provided.
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