It will now be possible for Indian companies to import power from across the border and sell it in the domestic market. The Central Electricity Regulatory Commission (CERC) today announced significant changes in the power-trading policy, including a regulatory framework for cross-border trading of power, increasing the net-worth requirement for the traders, banning purchase of power from defaulting utilities and halving the number of licence categories to three.
The new regulations, which replace the existing norms of 2004, will be implemented with immediate effect for new applicants seeking power trading licences. The existing licensees will, however, be given time until March 2010 to align themselves with the new regulations.
The regulator has made a change in the definition of ‘inter-state trading’ that will enable trade of power between India and its neighbouring countries like Nepal and Bhutan.
| NEW NORMS |
| * Cross-border trading to form a part of inter-state trading |
| * Categories of trading licences reduced to three from six |
| * Networth requirement increased to Rs 5 crore-Rs 50 crore from Rs 1.5 crore-Rs 20 crore |
| * Power purchase from defaulting entities banned |
The decision by the electricity regulator, which forms a part of the new inter-state trading regulations, will help private participation in power trading . “This has provided a regulatory framework for import of electricity by licensees, which was not taking place earlier,” said Alok Kumar, secretary, CERC.
There have been very few instances of power import from across the border in the recent past. One of them is the Tala transmission project, which brings power from Bhutan to Delhi. This is being developed by Tata Power for Power Grid Corporation of India Ltd (PGCIL), the country's largest power transmission company.
Tata Power has also recently signed a Power Purchase Agreement (PPA) for trading of power through the Dagachu power project in Bhutan. “This had to be accommodated through policy changes,” said a senior analyst from an accounting and consultancy firm.
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Through another change in the regulation, the commission has increased the minimum net worth requirement for a company applying for a power trading licence from Rs 1.5 crore to Rs 5 crore. For the higher category of the licence, the net worth requirement has also been increased to Rs 50 crore from Rs 20 crore currently.
While such a move may mean exclusion of small power traders, experts believe that the move is necessary. “Price of power too has gone up with the volume. Each trader is likely to take larger exposure now. So, there is enough rationale for the increase in the net worth requirement,” said the analyst.
The commission has also reduced the number of categories under which trading licences are issued to companies from six to three. “We observed that some categories of licences were not really functioning. Most of the licenses were being issued in A and F categories,” Kumar said.
Currently, a company interested in power-trading can apply in any of the six categories of licences depending on its net worth and the amount of electricity to be traded every year. For example, an applicant is required to have net worth of Rs 1.5 crore for allotment of licence under category A, which gives him the right to trade power up to 100 million kilowatt hours.