ELECTRICITY MARKETS

LECTURE BY

A.VELAYUTHAMEx-Member,MERC

Delivered at

CIPACO, EEE – PEC,Pondicherry

On - 09/06/2011

1RELIABLE ,QUALITY POWER(50Hz),GREEN POWER

ELECTRICITY MARKETS IN INDIA

• Legislation

• Governance

• Market Surveillance

• Ownership of Power Exchanges

LEGISLATION

• Power Trading

• Power Exchange

• National Electrical Policy

• National Tariff Policy

• Electricity Regulatory Commissions

REGULATIONS

• Power Trading License

• CERC’s Guide lines on PX

• Trading margin

• Transparency

PT License Provisions

• The licensee shall not charge any amount exceeding the trading margin for the inter-State trading in electricity, fixed by the Commission from time to time

• The licensee shall ensure that the buyer and the seller are, with special energy meters on their periphery and that the mechanism for Unscheduled Interchange accounting by the appropriate authority is in place.

PT License Provisions Contd…

• The licensee may coordinate with Regional Power Committees, the Central Transmission Utility, State Transmission Utilities, the Regional Load Despatch Centres, and the State Load Despatch Centres with regard to his trading- related activities, to the extent authorized by the concerned buyer and seller.

Eligibility for trading

• At the Exchange, only the Exchange Members, who have been admitted as such by the Exchange, are eligible to trade. Persons, who are not Exchange Members, can participate in trading only as Clients through a registered Exchange Member. Clients can also be provided direct access on the Exchange ATS, if consent is given by his Member and permitted by the Exchange.

Membership Fees (in Rupees.)

• Admission fees 35,00,000

• Membership Application and Processing Fees 10,000

• Membership Annual Subscription Fees 5,00,000

Security Deposit(in Rupees)

Member Security Deposit 25,00,000

Governing law and jurisdiction(IEX):

• Every Contract executed as per Bye-laws of

the Exchange shall take effect as a Contract made in New Delhi and shall be governed by the laws of India under the jurisdiction of the Courts of New Delhi

Delivery Point

• Delivery point shall be the seam of the respective grid connected entity. However, for the purpose of the contract, the trade schedule shall be reckoned at the periphery of the regional transmission system in which the grid connected entity is located. The actual schedule at various seams including that of grid connected entities shall be worked out after incorporation of transmission losses in kind. The trade schedules shall be used for the purpose of

payment of transmission charges.

Delivery Point contd..

• For example delivery point of a state embedded entity in Maharashtra will be at the seam of the intra state entity. For a trade schedule of 100 MW purchase by this entity, the schedule for this transaction at WRTS periphery would be 100 MW, at Maharashtra periphery would be 96MW.(assuming 4% regional loss) and at the intra state entity periphery would be 91.20 MW (assuming 5% Maharashtra state loss).

Delivery Point contd..

• The transmission charges payable will be for 100 MW. Additional losses in the above example have been assumed to be nil and the same if any would be applied as per procedure for scheduling of collective transactions, issued by CTU.

• Similarly, for a trade schedule of 100MW sell, then the schedule at the WRTS periphery and State periphery will be 104.17 MW and 109.65 MW

respectively.

MARKET MONITORING REPORT

• short-term transactions of electricity

contracts of less than one year period for electricity transacted through Inter-State Trading Licensees and directly by the Distribution Licensees, Power Exchanges (Indian Energy Exchange Ltd (IEX) and Power Exchange India Ltd (PXIL)), and Unscheduled Interchange (UI).

Energy Transaction in 2009

• total electricity generation in India

-short-term power market 8 per cent

- long-term contracts 92 per cent

• short-term power market Volume (Excl UI)

-30.6 billion kWh (units)

• UI - 24.43 billion kWh

- between distribution companies 5.61

billion kWh

WEIGHTED AVERAGE PRICE OF ELECTRICITY

• Year 2009

Power exchanges - Rs. 5.73 per kWh

Trading licensees -Rs. 6.41 per kWh

• Year 2008

Power exchanges -Rs. 7.57 per kWh

Trading licensees -Rs. 7.04 per kWh

OA & Congestion in the year 2009

• beginning of the process of procurement of power by the industrial sector consumers through power exchanges

• the actual volume transacted could have been about 17 percent higher, had there been no congestion prevalent in the system.

MEMBERSHIP IN POWER EXCHANGE

• Member who is an Electricity Trader or

• Member who is a distribution licensee including deemed distribution licensee or a grid connected entity or

• Member who is neither an Electricity Trader nor distribution licensee including deemed distribution licensee nor a grid connected entity

MAJOR SELLERS OF ELECTRICITY

2009 (MU)

1 Jindal Power Limited (Chhattisgarh) 2987 12.90%

2 Govt. of Himachal Pradesh 2845 12.30%

3 JSW Energy Limited, Karnataka 2328 10.10%

4 State Power Dev. Corpr.(J&K) 1160 5.00%

5 Nav Bharat Ventures Limited (NBVL) 1151 5.00%

(- AP & Orissa)

MAJOR BUYERS OF ELECTRICITY

MU

HPPC, Haryana 3059 13.20%

RPPC, Rajasthan 2629 11.40%

PSEB, Punjab 2440 10.60%

JVVNL, Rajasthan 2363 10.20%

APPCC, Andhra Pradesh 1932 8.40%

(MSEDCL), Maharashtra 1411 6.10%

TNEB), Tamil Nadu 1360 5.90%

RInfra, Maharashtra 1229 5.30%

Major Sellers of Electricity through Power Exchanges (Vol. in MU)

Gujarat Urja Vikas Nigam Limited 705 12.20%

JSWEL- JSW Energy Limited, Karnataka 636 11.00%

Chhattisgarh State Electricity Board 586 10.10% Jindal Power Limited (Chhattisgarh) 505 8.70%

WB Electricity Distribution Company Ltd 322 5.60

Major Buyers of Electricity through Power

Exchanges (Vol. in MU)

JVVNL Rajasthan 1613 27.80%

APCPDCL 739 12.80%

TNEB 513 8.90%

Tamil Nadu 448 7.70%

UPPCL Uttar Pradesh 362 6.20%

MSEDCL Maharashtra 349 6.00

KSEB Kerala 282 4.90%

Surveillance

• In order to ensure market integrity and to avoid market abuses, the Exchange will use various on-line and off-line surveillance tools. The Exchange shall have the right to take appropriate actions in such cases.

-Validation of orders

-Price movement

-Market behaviour

-Correlation with Unscheduled Interchange (UI)

Correlation with Unscheduled Interchange (UI)

• The trend in the UI rate and the prices in the Exchange shall be compared for any major differences. In case of individual Member its trend of trading on the Exchange shall also be compared with his UI obligations. Further, in case of continuous and heavy default on UI payment by any Member, the Exchange has authority and discretion to suspend the Member, among other things.

OWNERSHIP OF POWER EXCHANGES

• Indian Energy Exchange Limited (IEX)

• Power Exchange India Ltd (PXIL)

PRICE OF POWER TRANSACTED THROUGH TRADERS

Sr.No Period of Trade Weighted Average Sale Price (Rs)

1 RTC 4.65

2 PEAK 5.64

3 OFF PEAK 4.79

PRICE OF POWER TRANSACTED THROUGH TRADERS

Sl. No. Sale Price (Rs/kW)

1 Minimum 3.19

2 Maximum 8.04

3 Weighted Average 4.67

PRICE OF POWER TRANSACTED THROUGH POWER EXCHANGES

Sl.No.

MCP IEX PXIL

1 Minimum 1.2 1.2

2 Maximum 9.35 13.95

3 Weighted Average 3.34 5.13

THANK YOU

RELIABLE ,QUALITY POWER(50Hz),GREEN POWER

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