| The Central Electricity Regulatory Commission (CERC) today issued draft guidelines for inter-state power trading. Under the new guidelines, six categories of trading licencees have been specified. |
| The categories have been prescribed depending on the volume of electricity proposed to be traded by the applicant, with net worth requirements ranging from Rs 2 crore to Rs 25 crore. |
| The regulator has also prescribed two basic types of bilateral contracts "" contracts between power generators and traders; and contracts between traders and distribution licencees, according to a CERC statement. |
| Applicants will have to pay licence fees depending upon the category for which they are applying, with fees ranging from Rs 1 lakh to Rs 15 lakhs. |
| Each licence will have a tenure of 25 years, with the regulator reserving the right to fix the trading margins from time to time. |
| As per the norms, companies which apply for a licence will be required to engage at least two full-time professionals with experience in finance and power system operations. |
| Besides, separate accounts for trading have to be maintained and information will have to be provided about the source of power purchase and the agency to which power is sold along with pricing details. |
| The Commission has the right to modify licence conditions in public interest and may even revoke the same in case of default or violation. CERC also has the right to issue appropriate directions to check abuses, the statement said. |
| "Introduction of trading licencees is expected to promote trading and will facilitate better utilisation of generation capacity," the statement said. |
| Trading has been recognised as a distinct activity under the Electricity Act 2003 and CERC has been entrusted with the task of issuing licences to utilities planning to take up inter-state electricity trading. |
| Section 52 of the Electricity Act 2003 also authorises the regulator to specify the capital adequacy norms, technical requirements and credit worthiness for undertaking trading business. |
| A number of private sector players, including Reliance Energy Trading and Tata Power, have applied for a trading licence. |
| These companies have been allowed to trade at their own risk pending notification of norms by the CERC. |
| The Adani Group, Koyela Energy Resources Pvt Ltd and Amalgamated Transpower Ltd. are the other players who have applied to the CERC for trading licences. |
| Global Energy Ltd., another private player, has already started trading power between Goa and Delhi. |
| While Reliance Trading has applied for permission to trade in electricity in all states, except Jammu and Kashmir, Amalgamated Transpower, which has a paid-up capital of Rs 3 crore, is negotiating with the governments of Sikkim, West Bengal, Orissa and Madhya Pradesh. |
| Since 1999, the Power Trading Corporation (PTC) has been the sole trading entity undertaking trading of electricity between states. Power trading is increasingly being viewed as a viable business among players in the sector. |
| The increasing trend among states like Delhi, Madhya Pradesh, Haryana and Uttar Pradesh towards creating tradable buffers to take care of their energy security, while trading surplus power with other states when domestic demand is low, is largely responsible for the optimism. |
The guidelines
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Power trade licences specified
Electricity regulator issues draft trading norms
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First Published: Dec 11 2003 | 12:00 AM IST
