CERC Grants PXIL Extra Time To Comply With Power Exchange Norms

CERC Grants PXIL Extra Time To Comply With Power Exchange Norms

The Central Electricity Regulatory Commission (CERC), in its latest judgment granted the Power Exchange India Limited (PXIL) additional time to comply with the Power Market Regulations of 2021. The development came to the fore when PXIl, one of the three power exchanges in India, moved the Commission seeking an extension of timing to comply with the regulations.

While the petitioner was close to complying with most of the regulation mandates, it asked for an additional time up to March 31, 2025, to comply with the provisions of diversified stakeholders and the maximum ceilings on stakes. 

CERC found that the promoter shareholders (non-member shareholders) and some of the member shareholders (Traders) of PXIL exceeded the shareholding ceiling of 25% and 5%, respectively, specified under Power Market Regulations. It included the larger non-member share of NSE Investments Ltd (NSEIL) and the National Commodity and Derivatives Exchange Limited (NCDEX). These two entities were non-members and promoters of the power exchange. 

“Based on the Petitioner’s submission regarding the future action plan to achieve the required shareholding pattern, the Commission is of the view that the Petitioner should first of all strive to dilute the shareholding of two promoter shareholders i.e. NSE Investments Ltd (NSEIL) and National Commodity & Derivatives Exchange Limited (NCDEX) (Promoter) up to 25%, on or before 30.09.2024,” the order said. 

CERC said that power exchanges should be a fully demutualized and ring-fenced organization with a dispersed ownership structure to avoid risks. “While the request for a time period till 31.03.2025 is not justified, based on the petitioner’s submissions, we are of the view that some more time may be granted to PXIL to achieve the shareholding pattern as per PMR 2021. Accordingly, in exercise of the powers to relax, under Regulation 56 of PMR 2021, the Commission grants the Petitioner time up to 30.09.2024 to align its ownership structure (in respect of NSEIL, NCDEX and WBSEDCL) as per the requirement under Regulation 15 of PMR 2021,” the order said. 

The Commission also asked PXIL to submit a report to the Commission by December 31, 2023, on the status of their progress. “The Petitioner should also ensure that a robust risk management and surveillance process is in place to address the market risks and avoid any conflict of interest. In case PXIL fails to achieve the required shareholding pattern by timelines stipulated in this order, the Commission shall be constrained to initiate measures as may be deemed appropriate in accordance with the provisions of PMR 2021,” it added.