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Information @ a Glance

  • Power trading inherently means a transaction where the price of power is negotiable and options exist about whom to trade with and for what quantum.
  • The Central Electricity Regulatory Authority (CERC) has issued a new norm for companies to carry inter-state power trading business. Companies must have net worth ranging between Rs 5 crore and Rs 50 crore for obtaining three different types of power trading licenses.
  • According to CERC guidelines issued in May 2006, the margins for inter-state power trading are capped at 4p a unit of power traded. Total power trading volume in the past five years have increased at a compounded annual growth rate (CAGR) of 17%. The entry of new players in the power trading business affected PTC’s volume, resulting in steep erosion of the company’s market share (to 46%).
  • Power demand during the rainy seasons is low in the States of Karnataka and Andhra Pradesh and high in Delhi and Punjab. Whereas many of the States face high demand during evening peak hours, cities like Mumbai face high demand during office hours. The Eastern Region has a significant surplus round the clock, and even normally power deficit states with very low agricultural loads like Delhi have surpluses at night. This situation indicates enough opportunities for trading of power. This would improve utilization of existing capacities and reduce the average cost of power to power utilities and consumers.
  • Trading margins would not exceed 4 paise a unit if the selling price of electricity is less than or equal to Rs3 a unit. The ceiling of the trading margin shall be 7p a unit if the selling price of electricity exceeds Rs3 a unit. The 4p a unit cap regime was not adequate to cover the operational and market risks borne by trading companies due to strong competitive pressures, especially in the short-term buy and sell agreements. This regulation will help the growth of the power trading industry.
  • Under current U.S. trade policy, these nontariff barriers are the primary form of trade restriction. There are two primary types of interstate trade barriers: export taxes and import restrictions. Export taxes are levied on goods and services that are consumed mainly by people who reside outside the state that levies the tax. Import restrictions take two principal forms: taxes and administrative barriers.
  • The Central Electricity Regulatory Commission (CERC) has granted the licence to Patni Projects Pvt for inter-state trading of electricity under the Electricity Act 2007. The company has met with all conditions including net worth of not less than Rs 7.5 crore in order to trade up to 500 million units of electricity in a year.
  • Power trading in India is in infant stage and has high potential for growth. Provision of Open Access was a step towards commercialization of power market with high growth potential.
  • Open access to renewable power , CPPs, Merchant Power Plants etc. needs special attention that may help in development of power market.
  • In India, Inter – regional power transfer capacity, according to the statistics, stands at 9000 MW. A perspective transmission plan has been evolved to install an integrated and resilient Nation Power Grid in a phased manner by the year 2012 thereby augmenting the Inter- regional transfer capacity from the current level of 9000 MW to 30000 MW.

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