CERC Clarifies Jurisdiction to Develop Power Market in India
The Central Electricity Regulatory Commission, CERC, in its order dated 28 th April 2009 has stated that “regulatory oversight to promote development of market in power is vested in this Commission as mandated under Section 66 of the 2003 Act and, therefore, the orders, guidelines issued by this Commission and the regulations framed shall be binding on all concerned”. With this order the Hon'ble Commission has taken a step towards development of continuously evolving power market by providing clarity over its jurisdictional authority.
Earlier, Power Exchange India Limited (PXIL) had filed a petition with CERC challenging launch of derivative products by MCX using IEX 's day-ahead electricity trade price as base. The view expressed through the petition was that the Indian power market was not ripe for introduction of financial derivative products in electricity and that appropriate discussions and debates should have taken place among stakeholders in the electricity market before the launch of the same. PXIL therefore petitioned the Hon'ble Commission to provide guidance for development of Power Market in India .
The Order from CERC concludes with the following:
(a) FMC exercises jurisdiction over the forward contracts in accordance with the provisions of the FCR Act 1952 as they cannot be said to be inconsistent with those of the Electricity Act 2003 and the two statutes operate in independent fields.
(b) Regulatory oversight to promote development of market in power is vested in CERC as mandated under Section 66 of the 2003 Act and, therefore, the orders, guidelines issued by the CERC and the regulations framed by it shall be binding on all concerned.
(c) Power exchanges approved by the CERC need not approach FMC for an approval for the reasons that the contracts traded or to be traded outside the scope of section 15 of the 1952 Act.
(d) MCX and other commodity exchanges permitted trading of forward contracts by FMC at their platform shall be governed by the orders, guidelines, regulations and other prescriptions of this Commission since they are not inconsistent with the provisions of the 1952 Act.
Source : Infraline Newletter dt: 30.04.09
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