Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 : On 18th July, 2020, The Honorable Central Electricity Regulatory Commission (CERC) has released a Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020. These regulations may affect from the date of their publication in the Official Gazette.

Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

Major Objective of Electricity Regulatory Commission (Power Market) Regulations, 2020

  1. As per Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 now developers and buyers can do long-term future contracts on power exchanges by doing away with the current 11 days restriction.
  2. CERC came up with new concept called ‘Market Coupling’, meaning a process of collecting bids from all the power exchanges and matching them to discover a uniform market-clearing price. The job will be carried on by a ‘Market Coupling Operator’, an entity to be notified by the regulator
  3. Market participants shall include Grid Connected Entities, Power Exchanges, Members of Power Exchanges, Trading Licensees, Market Coupling Operator, OTC Platform and other entities as notified by the commission.

Scheduling, and Delivery

  • For Day-Ahead and Real-Time Contracts Price Discovery shall be done by Power Exchanges or by Market Coupling Operator, as and when notified by the Commission and the bidding mechanism shall be double-sided closed bid auction on a day-ahead basis or on a real-time basis, as the case may be.
  • Price discovered for the unconstrained market shall be a uniform market-clearing price for all buyers and sellers who are cleared: Provided that in case of congestion in transmission corridor, market splitting shall be adopted.
  • Scheduling and delivery of transactions for Day Ahead Contracts and Real-time Contracts (including the timeline for gate closure) shall be in coordination with NLDCs and in accordance with relevant provisions of the OA Regulations and the Grid Code as per new Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020.
  • Inter-State transmission charges and losses shall be as per the Open Access Regulations and the Sharing Regulations.

Intraday, Contingency & TAM Contracts

  1. For Intraday & Contingency Contract Price Discovery shall be as approved by the Commission based on the proposal of the Power Exchange.
  2. Scheduling and delivery of transactions for Intraday and Contingency Contracts shall be in coordination with the system operator and in accordance with relevant provisions of the Grid Code and the Open Access Regulations and the Procedure issued thereunder.
  3. Term Ahead Contracts shall be settled only by physical delivery of electricity without netting and shall be binding on the participants executing the transactions and No Circular Trading shall be allowed and the rights and liabilities of the parties to the Term Ahead Contract shall not be transferred or rolled over by any other means whatsoever.
  1. Renewable Energy Certificates:  transactions shall be in accordance with the procedure issued by the Central Agency in pursuance to the REC Regulations.
  2. Energy Savings Certificates transactions shall be in accordance with the procedure issued by the Administrator in pursuance to the Energy Savings Certificates Regulations.

Contracts transacted in the OTC Market

  1. As per Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 The price and other terms of a contract in the OTC Market shall be determined either through mutual agreement between the buyer and the seller or through competitive bidding process or as determined by the Commission.
  2. Settlement of contracts transacted in the OTC Market shall be only by physical delivery of electricity without netting.

Power Exchange conditions as per New Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

Power Exchange
  1. The applicant is a company limited by shares incorporated or deemed to be incorporated under the provisions of the Companies Act, 2013 with a Net worth of minimum Rs. 50 crores as per the audited special balance sheet as on any date falling within 30 days immediately preceding the date of filing the application for grant of registration.
  2. Power Exchange shall pay an annual registration charge as specified in the Payment of Fees Regulations by 30th of April every year in accordance with the Payment of Fees Regulations.
  3. The Power Exchange shall discharge the responsibility of activities mentioned in Clauses (3) to (5) of this Regulation in respect of Day Ahead Contracts or Real-time Contracts or any other contracts as notified by the Commission until the time the Commission issues notification for transfer of these responsibilities to the Market Coupling Operator.
  4. Membership of the Power Exchange shall be Trader Member, Proprietary Member, Facilitator Member

Transaction Fees on Power Exchange as per Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020: No Power Exchange shall charge transaction fee exceeding such fee as approved by the Commission provided that Operational power exchanges will be required to obtain approval of the transaction fee within three months of notification of these regulations.

Trading Margin Details as per Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

  • Trader Member shall charge trading margin in accordance with the provisions of Trading Licence Regulations, 2020 in respect of all transactions carried out through the Trader Member at the Power Exchange
  • Facilitator Member shall not charge a service charge of more than two (2.0) paise/kWh, including service charges for any subordinate service providers, for providing services for the transactions on Power Exchange.

Approval or Suspension of Contracts by the Commission

  • No permission shall be required for the contracts which are being transacted on a Power Exchange on the date of notification of these regulations
  • Power Exchanges may introduce new bid types or modify existing bid types conforming to the types and features of the contracts after consultation with stakeholders and National Load Despatch Centre, under intimation to the Commission
  • Any Power Exchange seeking permission to introduce a new contract shall submit Type of contract, Price discovery and matching methodology proposed, Delivery mechanism and delivery duration to the commission.

Clearing and Settlement

  • Now with this new Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 , Power Exchanges which have been granted registration by the Commission prior to the date of notification of these regulations shall be required to transfer Clearing and Settlement function to an entity established in accordance with the provisions of the Payment and Settlement Systems Act, 2007, within a period of one year from the date of notification of these regulations or such other period as may be approved by the Commission.

Congestion Amount management

  • Power Exchange maybe vested with congestion amount arising from the difference in market prices of different regions as a consequence of market splitting
  • Congestion amount shall be maintained in a separate account by the Power Exchange which shall be transferred to the Power System Development Fund in the manner as specified in the Central Electricity Regulatory Commission (Power System Development Fund) Regulations, 2019, as amended from time to time and any reenactment thereof, or utilized in any manner as may be decided by the Commission.

Market Coupling

  • Objectives of Market The coupling includes Discovery of uniform market clearing price for the Day Ahead Market or Real-time Market or any other market as notified by The commission, Maximization of economic surplus, after taking into account all bid types and thereby creating a simultaneous buyer-seller surplus.
  • Market Coupling Operator who shall be responsible for the operation and management of Market Coupling.
  • Market Coupling Operator, with the approval of the Commission, shall issue a detailed procedure for implementing Market Coupling including management of congestion in transmission corridor, the timelines for the operating process, information sharing mechanism with the Power Exchanges and any other relevant matters
  • Market Coupling Operator shall use the algorithm to match the collected bids from all the Power Exchanges, after taking into account all bid types, to discover the uniform market clearing price, subject to market splitting and shall communicate the results of the auction to the power exchange in a transparent manner.
  • Power Exchanges shall inform the participating bidders about the results of the auction as communicated by the Market Coupling Operator as per Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 .

OTC Platform

  • OTC Platform shall operate after obtaining registration under these regulations.
  • An Electronic platform with the information of potential buyers and sellers of electricity and  will maintain a repository of data related to buyers and sellers and provide such historical data to Market Participants.

Eligibility Criteria for registration of OTC Platform

  • So with Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020 , minimum Net worth of the applicant shall be Rs. 50 lakhs as on any date falling within 30 days immediately preceding the date of filing the application for grant of registration.
  • Power Exchange or Trading Licensee or any of their Associates or grid-connected entities shall not be permitted to set up, operate, or have any shareholding in an OTC Platform
  • Application for grant of registration to establish and operate OTC Platform shall be filed online on the website of the Commission
  • Registration of an OTC The platform shall continue to be in force for a period of five (5) years from the date of grant of registration unless such registration is revoked or canceled earlier

 Click Here to download Draft Central Electricity Regulatory Commission (Power Market) Regulations, 2020

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