CERC's Proposal to increase Trading margin- Traders ask for more

Tuesday, 15 December 2009 05:19 Lathish PV
CERCPower traders have opposed a Central Electricity Regulatory Commission (CERC) draft suggesting increasing trading margin from 4 paise to 7 paise per unit if the sale rate is more than Rs 3 on a short-term trading market. Even though the objective is to promote healthy trading market and protect consumer interest, traders including PTC India, Tata Power Trading Company and NTPC’s trading arm argued that the trading margin of 7 paise per unit was quite low and it did not even cover the basic costs of business and operation of market traders.

PTC India, which has over 50 per cent share in India’s power trading business, argued that the trading margin should not be less than 3 per cent of the purchase price. It, however, suggested that CERC could ensure that no trader charged an abnormally high margin through market surveillance and audit trail in case of market abuse and strong deterrent.

Tata Power Trading Company argued that the ceiling on trading limited the ability of power traders in providing new products and value-added services. Removal of the ceiling on trading margin would be in the interest of overall development of the electricity market.

Moreover, Tata Power Trading Company suggested the trading margin be settled in accordance with the prevailing market dynamics as the short-term power market was still evolving and low trading margin may impact the market development and in turn restrict competitive growth of the sector.

NTPC Vidyut Vyapar Nigam emphasised the need for further increase in trading margin, especially when traders faced huge risks in the wake of downward changes.

Source - Business standard