The regulator initiated suo motu action as the power exchanges started T+1 contracts, which enable settlement in 24 hours, without permission. The states alleged that the power exchanges enabled sellers to move to the uncapped term-ahead market, a bilateral market, said people aware of the matter.
“The states said this was done to bypass the regulator’s April 1 order capping prices at Rs 12 per unit in the day-ahead market where delivery happens next day and the real-time market for meeting exigencies the same day,” said one of the persons, who did not wish to be identified.
As per rules, contracts on term-ahead market cannot be less than T+2, where delivery is in two days.
The
(IEX) said the contract was available only for 17 days from April 13-29, and during this period a small volume of 4.5 million units was traded. Both exchanges told ET they have sent the information sought by the CERC.
Power exchanges, unlike traders, cannot launch products without the CERC’s consent. This attracts action under power market regulations, including revocation of licence. The CERC notice was based on complaints from some state distribution companies and also concerns expressed by the power ministry, said the people.
The CERC has told the exchanges that the power market regulations provide that no amendment to the rules shall be carried out without prior approval of the commission. “In view of the above, you are directed to explain under which provisions your power exchange had introduced the G-TAM daily T+1 contracts w.e.f April 13, 2022, and the reason for withdrawal of the same vide circular dated April 29, 2022,” said the CERC letter to IEX.
A similar letter has been sent to Power
Limited (PXIL) for modifications to delivery timelines with effect from April 24 and the reason for withdrawal on May 2.
“Regarding the CERC letter dated May 5, 2022, to both power exchanges in respect of daily T+1 contracts, in compliance with the regulatory provisions IEX had withdrawn the contract on April 29, 2022, which was available only in the green term-ahead market,” said Rohit Bajaj, head-business development, strategy and regulatory, IEX.
India witnessed an unprecedented power demand in April. The Centre invoked section 107 of Electricity Act on March 26 to direct the CERC to cap power prices, which touched ₹20 per unit. The directive had to be issued again on April 29, as the power regulator capped prices only in the day-ahead and real-time markets, and buyers shifted to the term-ahead market.
