Power exchange to usher in competitive pricing

The exchange is expected to lead to more competitive prices.

The Central Electricity Regulatory Authority is planning to set up a power trading exchange. The regulator will soon start public consultations to give final shape to the plan, which is expected to lead to more competitive prices for power as it will pool energy from various sources.

"The exchange will be managed by an impartial team and will free buyers and sellers of power from entering into long-term exclusive contracts," CERC Chairman AK Basu said.

The power regulator believes that this step will bring the country's power sector closer to the efficiencies that are witnessed globally.

While a bulk of the country's power is locked up in long-term contracts, the exchange will give new projects the option to keep some generation out of lock-in agreements.

Buyers and sellers will both put in their bids, which will be evaluated by the exchange. The pricing will not be totally free-market driven, as is the case in exchanges in the West, as India is still a power-deficit country. "It will be a controlled market with regulatory oversight," Basu added.

There exists an inter-regional power transfer capacity of around 6,000 Mw in the country, which is expected to increase further to about 9,500 Mw in the next few years.