M A I N   N E W S

Future trading is here
States can buy
advance power
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 25
The government is all set to set up two electronic power exchanges for future trading in power. Other than allowing the state power utilities and power distribution companies to make future contracts in power, this will bring about transparency in power trading.

With the setting up of these exchanges, power distribution companies of various states will be able to make future contracts for buying power for the month when the demand is expected to go up. This move of trading power through electronic exchanges will be of particular help to power deficient states like Punjab and Haryana, which can buy power in advance and at reasonable rates. Generally, the state distribution companies make power trading arrangements during the crisis period, when they are forced to buy power at exorbitant rates. These exchanges will also provide a payment security mechanism to buyers and sellers.

While one power exchange is being set up by the Multi Commodity Exchange (MCX), the second will be set up through a joint venture promoted by NTPC Ltd, National Stock Exchange (NSE), Power Finance Corporation, National Hydroelectric Power Corporation and National Commodities and Derivatives Exchange (NCDEX). The MCX-sponsored power exchange, Indian Energy Exchange Ltd, would become operational by March while the other would become operational later this year, said Bhanu Bhushan, member of the Central Electricity Regulatory Commission (CERC).

Bhushan, who was in the city to participate in a seminar on Open Access Policy at the CII here today, said the power exchange would streamline power trading in the country. At present electricity was traded bilaterally at mutually agreed rates. The exchange for electricity trading would also help in standardising electricity as a product that could be traded. The concept of electronic power exchanges was a fairly popular concept in the USA, UK, Spain and Norway. Initially, trading would be on a day-ahead basis and once the procedure was standardised, future trading could begin.

He added that the power exchange would also act as a regulator, as it would ensure that power trading was done on the basis of the existing market rates of power.