CERC Declines A Decision on IEX Application To Permit Addl. Term Ahead, GTAM Trading

The Central Electricity Regulatory Commission (CERC) has delayed giving a categorical answer on certain approvals sought by Indian Energy Exchange Limited (IEX) and Power Exchange India Limited (PXIL) until the Supreme Court’s verdict on the same arrives.

IEX had filed a petition under the 2010 Power Market Regulations, 2010, for the approval of the introduction of additional term ahead contracts and green term ahead contracts beyond T+11 days at IEX. Additionally, IEX had also sought approval for the amendments in the business rules of IEX.

During a virtual hearing held yesterday, IEX’s representative stated that the petition was based on a Ministry of Power letter released in July last year, wherein the ministry, after considering the report of the committee on “Efficient Regulation of Electricity Derivatives,” observed that CERC and Security and Exchange Board of India (SEBI) may take necessary action in the concerned civil appeal cases in their respective areas of jurisdiction, which will then be subject to outcome of decision of the Supreme Court.

In light of this submission, the representative requested the commission to grant the approvals sought by IEX and permit it to start the stakeholders’ consultation process in this regard.

Further, PXIL stated during the hearing that it had submitted a petition similar to IEX’s under Section 66 of the Electricity Act, 2003, for the approval of the introduction of Month(s) Ahead Contracts at PXIL.

The commission was requested to take up both matters together.

Upon considering the facts of the two cases, the commission observed that since the issue of jurisdiction to control and to regulate the futures/forward and derivative contracts in electricity is still pending consideration before the Supreme Court and any approval of CERC would be subject to the outcome of SC’s decision in the concerned civil appeal cases, consideration of approval of additional Term Ahead Contracts and Green Term Ahead Contracts beyond T+11 days or Month(s) Ahead Contract, at this stage, would be pre-mature.

Accordingly, the commission disposed of both the petitions by IEX and PXIL.

CERC has permitted the petitioners to approach it with fresh petitions on the same subject matter after SC’s announces its decision in the concerned civil appeals. In such an event, the filing fees deposited by the petitioners will be adjusted against the new petitions they file later on. At the moment, it does look like by the time final approvals come, the third power exchange in the country, PSL ( a consortium of PTC India (PTC), BSE Investments, and ICICI Bank) might also have started operations.