Tata Power Trading Company Ltd, the power trading arm of India’s largest private sector electricity generator, Tata Power, has approached the Central Electricity Regulatory Commission (CERC) against the two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL).
In a petition filed at the regulator last month, Tata Power Trading (TPT) has questioned the functioning of some members of the exchanges. The company has accused these members of operating as power traders but without any licence granted by the commission.
“The exchanges have registered some people (as members) who are neither grid-connected generators nor trading licensees. Our main objection is that while these members are performing activities akin to a licensed power trader, they do not possess trading licences,” said a senior official from TPT.
The CERC admitted TPT’s petition on July 30 and has directed the two exchanges to file their reply by August 21.
Anybody who wishes to buy or sell power at the exchange is required to route the transaction through a member. Entities such as power generators, distribution companies, independent power producers (IPPs), captive power producers (CPPs), merchant power plants and traders — with a minimum net worth of Rs 1.5 crore — are eligible to become members of the Indian Energy Exchange.
“As a trader we are affected. We have to follow all the stringent norms for a licensed trader, like the net worth criteria, annual trading licence fee and the submission of information regarding our operations to the commission. But these do not apply to the members of the exchanges,” said another official from TPT.
The electricity regulator is currently working on a proposal to formulate norms for functioning of power exchanges in India. These are likely to be announced soon.
However, both the exchanges have denied the accusation by TPT on different grounds. “Our members are not covered under the definition of power trading, as defined by the Electricity Act. They are not buying or selling power in their own name. They are only facilitating the contracts which are entered into at the exchange.
Can this be called trading?” asked a senior official from IEX, India’s first power exchange.
The Electricity Act, 2003, defines power trading as “purchase of electricity for resale thereof”. The Act, however, further defines an electricity trader as “a person who has been granted a licence to undertake trading in electricity”.
“Both the membership and the clientship are voluntary at the exchange. There is no compulsion to trade. If there is no match (between the buy bids and the sell bids), that contract does not materialise,” the IEX official added.
The IEX, which started functioning in June last year, has over 60 registered members and more than 90 clients currently. The exchange, promoted by PTC India and Financial Technologies India Ltd (FTIL) has so far traded over 4,300 million units of power with an over Rs 3,400 crore trade value.
IEX accounts for over 90 per cent of the power currently traded at the exchanges in India.
Denying the charges by TPT, a senior official from Power Exchange India Ltd (PXIL) said, “We are a fully governed entity. We are regulated by the Commission.” PXIL started operations in October last year and has so far traded over 300 million units of power.
