Power trading: Government asks regulator CERC to begin process for coupling power exchanges

The power ministry has asked Central Electricity Regulatory Authority (CERC) to initiate the process of coupling multiple power exchanges, a mechanism which seeks to ensure uniformity in price discovery of energy at trading platforms. At present India has three power exchanges — Indian Electricity Exchange (IEX), Power Exchange of India (PXIL) and Hindustan Power Exchange (HPX).

In the present scenario, buyers and sellers at each exchange do trading of electricity and discover spot price separately at these exchanges. After coupling of exchanges, the price discovery would be uniform.

In a communique to the power regulator CERC, the ministry said, “Several stakeholders approached the Ministry of Power on the subject of market coupling in the context of multiple power exchanges.

“The ministry of power has decided to go ahead with the process…CERC is requested to take suitable action, so that the process of consultation and the finalisation of the construct for its implementation is done expeditiously and the same can be implemented.”

Naveen Singh, head, business development at Hindustan Power Exchange, said in a statement that the decision to implement market coupling on power exchanges is a welcome move for the power market.

“We thank the power minister and the power ministry for initiating such a transformative reform. We are confident that the CERC would soon come up with the necessary regulatory framework to ensure its implementation at the earliest.” He pointed out that this will give a fillip to the service levels in the power market, and ensure better transparency and uniform prices discovery across exchanges. The move is also expected to bring down the power tariff in the country significantly, he opined.

An IEX spokesperson said, “Today in India we have a voluntary market framework where all exchanges have equal opportunities. Market coupling is done to couple different markets operating in different geographies, which is not applicable in our case.”

The spokesperson explained that in India all the regions are already coupled and the country has one market and one price.

“Government has requested the CERC to initiate the process of consultation and finalisation of construction. I am sure all aspects like the objective of coupling and need in the current market framework will be examined,” the spokesperson added.

The IEX has the largest market share of 88 per cent in total power trade at multiple exchanges in India.