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Rediff News  All News  » Business » Soon you will be able to buy, sell power!

Soon you will be able to buy, sell power!

April 18, 2006 16:14 IST

Electricity could soon be bought and sold just like equity shares and commodities with Central Electricity Regulatory Commission initiating the exercise for setting up a power exchange in the country.

"We will shortly issue a discussion paper to invite suggestions and feedback from various stakeholers on a power exchange," the commission chairman A K Basu said.

He said an exchange was necessary to create a power market in the country and bring in more discipline among buyers and sellers of electricity. The commission has finalised guidelines and a draft note for the purpose, he said, but added it would take some time before the exchange starts operations.

The proposed exchange, similar to that in the US and Europe, would function on the lines of commodity exchanges such as NCDEX or MCX and will provide a platform for buyers, sellers and power traders to enter into contracts. It would be operated by an independent management under the overall supervision of the regulator.

When operationalised, the exchange would make electricity a standard tradeable product with a distinct price for each hour of the day. This means that the buyer may pay different price for power purchased during peak and off-peak hours.

While it is still not decided whether there would be only one national exchange or several regional exchanges, it would facilitate development of a common trading platform and help conduct trading in an efficient, transparent and equitable manner.

Since unlike western countries, India was facing power shortages, Basu said the exchange would take into account such factors and also have enough safeguards to prevent manipulation.

The majority of the country's power is traded through long-term contracts and the exchange would faciltate short- term trading. The exchange would be a one-stop destination, where buyers and sellers can both put in their bids, price of electricity would be discovered and transmission corridor could be booked.

Basu said the discussion paper was prepared after power major NTPC Ltd, trading company PTC India Ltd and transmission monolith Power Grid Corporation made a presentation to CERC.

The three companies had earlier appointed Europe's NordPool and Crisil Advisory Services as consultants to look into the various aspects of setting up the exchange.

A high-level team of officials from National Thermal Power Corporation, Power Grid Corporation Of India Limited, PTC, Central Electricity Authority and Power Ministry had last year visited the US, Norway, Canada, Australia and the UK to study the markets there so as to evluate a suitable model for India.

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