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Home News Power Sector News CERC for strict code for power traders

CERC for strict code for power traders

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Pramod DeoInter-state power trading licensees may attract stringent penalties for contravention of trading regulations, going by certain proposals of the Central Electricity Regulatory Commission (CERC). In draft amendments to the trading licence regulations, the statutory body has mooted a penalty of Rs 1 lakh for each contravention, besides a ban from trading in short or medium term market or through power exchanges for a period of up to six months and a suspension of the licence for a similar period and, sometimes, even its revocation.

 The country has 56 inter-state licensees, as at the end of the 2011-12 financial year.The CERC also wants the licensees to follow a strict code of conduct. They should maintain high standards of integrity, dignity and fairness in the conduct of its trading business. The licensees must adequately deal with inquiries from clients, and make timely disclosures in accordance with the applicable regulations and guidelines so as to enable them to make a balanced and informed decision. Moreover, licensees would "see that grievances of client are redressed in a timely and appropriate manner".

CERC chairman Pramod Deo says the draft amendments to the inter-state trading regulations are aimed at addressing certain gaps and discrepancies besides taking a holistic look at traders' risk and improving risk-monitoring of traders. "The proposed amendments also aim to put in place a system for auditing of inter-state trading licensees on the lines of power exchanges," he told media.


The draft amendments also seek a gradation in taking action against the licensees for contravention of regulations. There would even be a provision of issuing warning to the defaulting licensee, Deo added.

The CERC's draft amendment regulations come at a time when 94 billion units of power trading was reported in 2011-12. Of this, nearly 36 billion units was traded through bilateral contracts and term-ahead contracts. As for the rest, 15 billion units were traded through power exchanges, and 28 billion units through unscheduled interchange route.

A leading licensee from the private sector, who did not want to be identified, observed that the draft amendments would lead to further paper work for licensees. "In any case, all trading licensees are putting their business details on their websites," he noted. "It seems CERC is keen to micro-manage the functioning of the licensees."

Proposed penalties
* Rs 1 lakh fine for each contravention
* Ban on trading in short term market or medium term market or through power exchanges for a period of up to 6 months
* Suspension of licence for a period up to 6 months or revocation of the licence
Proposed code of conduct for licencee
* Should maintain high standards of integrity, dignity and fairness in the conduct of its trading business.
* Should endeavour to ensure that inquiries from clients are adequately dealt with
* Should see that grievances of client are redressed in a timely and appropriate manner

The 1998-founded regulator with quasi-judicial powers has, in the draft amendments, mooted allowing existing trading licensees time up to July 31 this year to submit information about the volume of electricity proposed to be traded in 2012-13, along with the special balance sheet as on March 31 this year. Further, traders, including distribution companies, would also have to submit annual return of inter-state transactions detailing volumes transacted (in million units, or mu,) and rupees), total trading margin earned (in case of licensed traders), complete list of buyers and sellers (as applicable) and total volume transacted in intra-state transaction (in mu and rupees). This practice, which CERC wants to start from 2013, should be certified by a chartered accountant by April 30 every year.

Further, traders would have to disclose the transaction details of inter-state transactions as well as petitions filed by them and orders in a bid to bring more transparency to the system and help the clients in making informed decisions.

Source - Business Standard


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