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Home News Power Sector News Mumbai HC to decide who will regulate power futures

Mumbai HC to decide who will regulate power futures

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Mumbai HCThe Bombay High Court (HC) will hear the Cabinet and law secretariats' views on the regulation of power futures this December 10, which will determine whether commodity exchanges can offer futures trading in power. The views expressed by the secretariats will be a matter of interest considering that a meeting of a committee of secretaries (CoS), including both Cabinet and law secretaries, remained inconclusive on the issue of who should regulate power futures - Central Electricity Regulatory Commission (CERC) or Forward Markets Commission (FMC) - said a person with knowledge of the development.

After hearing the arguments of FMC and MCX against CERC in October, the court reserved its judgement as it wanted to ascertain whether the government would take a decision on the contentious issue or let the court decide the matter. The court held a chamber meeting late last month in order to ascertain the "correct position" of the government before it proceeded further and reserved its judgement until December 10.

The CoS met in July to try for a conciliation between the regulators but it failed to resolve the issue because CERC had already passed two quasi-judicial orders on the regulation of electricity contracts in April 2009 and in January 2010. While the first order stated that CERC had concurrent jurisdiction over electricity futures, the subsequent one stated that it was the sole regulator of all electricity contracts.

"Since conciliation between the two regulators seems unlikely in light of the two orders not being withdrawn, it may be left to the court to resolve the issue," said the person quoted earlier.

BC Khatua, chairman of FMC, and Pramod Deo, chairman of CERC, declined to comment. Attempts to reach the counsel of FMC and CERC - Janak Dwarkadas and Aspi Chenoy respectively - remained unsuccessful. FMC petitioned the court last year against the power regulator, arguing that commodity exchange MCX would have to register with it for offering power futures trading since CERC had juridiction over the instrument. MCX went to court a little later against CERC but the court heard both arguments (FMC & MCX vs CERC) simultaneously.

CERC also said that allowing speculation in electricity would be akin to placing commercial interests over consumers'
interests. FMC, on its part, maintained that under the FCRA Act of 1952, futures trading in electricity vested with it and MCX, which was registered with FMC, could offer such contracts on its trading platform. Interestingly, FMC sought legal recourse against the CERC order on the advice of the law ministry.

Source- Economic Times


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