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Home News Power Sector News CERC approves week ahead and month ahead trading at IEX

CERC approves week ahead and month ahead trading at IEX

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CERC permits week ahead and month ahead trading in Power excahngeCentral Electricity Regulatory Commission(CERC) on 18-11-2008, had approved the request of Indian Energy Exchange (IEX) to trade power on week/month ahead basis. Now, IEX trades less than 0.5% of the market and struggles for survival after launch of second power exchange- Power Exchange India Limited(PXI).
Until now, the Indian Energy Exchange (IEX), instituted on the lines of the Bombay Stock Exchange to trade exclusively in power, traded in day-ahead power. This meant that power utilities would post their requirements daily, along with the price and time at which they wanted to buy it. Based on this, IEX would determine the supplier and the deal would be completed, without the identity of the buyer or supplier being known to either party.

“When we applied to the power exchange, we wanted to trade in all kinds of requirements (daily, weekly and fortnightly). We were told that once we established and successfully operated our day-ahead trading business, we would be allowed to go in for long-term contracts. Accordingly, we filed an application with the Central Electricity Regulatory Commission (CERC) for introducing term-ahead contracts,” said Jayant Deo, managing director, IEX.

Responding to IEX submissions, the NLDC commented that they felt the current open access regulations may have to be changed if Term Ahead Contracts are to be traded on IEX. The CERC instructed IEX and NLDC to mutually co-ordinate between themselves for introducing the Term Ahead Contracts. “CERC further said in case open access procedure has to be amended then the same may also be suggested,” he said.

At a CERC hearing on 18-11-2008, it was decided that term-ahead contracts would be introduced in a neutral and transparent manner. CERC stated that IEX and the National Load Despatch Centre (NLDC) must mutually coordinate for introducing term-ahead contracts. With CERC decision, buyers (read power utilities) will be able to tie up for power on a long-term basis.

Shantanu Dixit of Pune-based Prayas energy group said, “This will bring more transparency to the transactions.” He however said that CERC will have to be more watchful and ensure that power prices were not manipulated by any party. “The CERC’s role will now be more critical and complex,” he said.

On 9th June 2008 CERC accorded approval to IEX to commence its operations and 27th June 2008, Indian Energy Exchange Ltd (IEX), India’s first-ever power exchange started functioning.The IEX at present, facilitates power transactions on day ahead basis, which means that power can be bought for the next day, only a day before. This results in some uncertainty since power availability keeps changing. To make more business and more profits, IEX approached the CERC requesting permission for starting power transactions on week/month ahead basis.

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