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A Staff Presentation
Developing a Common Platform
for Electricity Trading





RAVINDER
Chief (Engineering)
Central Electricity Regulatory Commission
7
th
Floor, Core 3, SCOPE COMPLEX, Lodhi Road,
New Delhi- 110003, INDIA
Ph. 91 11 24364960
E mail: ravinderveeksha@hotmail.com

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All INDIA INSTALLED CAPACITY(MW)
RES (Excludes
captive )
5%
6191 MW
Nuclear
3%
3360 MW
Hydro
26%
32326 MW
Thermal
66%
82410 MW
Thermal Hydro Nuclear RES
(As on 31.03.06)
TOTAL - 124287 MW
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ALL INDIA INSTALLED CAPACITY (MW)
Sector Wise (As on 31-03-2006)
State
57%
70224 MW
Central
32%
39924 MW
Private
11%
14139 MW
Private Central State
TOTAL - 124287 MW
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Market Development is the responsibility of the
Electricity Regulators (Sec 66, 178 IE Act,
2003).
Sec 174: The ACT is overriding
Preventing market domination is the
responsibility of the Regulators (Sec 60, IE Act,
2003).
Mandate for developing a Power Exchange
given to CERC in the National Electricity
Policy.

Statutory Provisions
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Most of the supplies are tied up in long term PPAs:
Mostly, regulated two-part tariff: Ideal for investment
promotion as well as price security for Discoms
Short term trading constitutes 2 to 3% of the total
supply.
Trading essentially between surplus & deficit distribution
utilities.
Trading is essential for resource optimisation and
meeting short term peak demand and for disposing off
surpluses which are inevitable as a utility has no direct
control over consumer load .

Current Scenario
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ALL INDIA POWER SUPPLY SCENARIO
(April, 2005 - March, 2006)
ENERGY
550
560
570
580
590
600
610
620
630
640
1
B
U
632 B U
579 B U
Requirement Availability
8.3% Deficit
PEAK DEMAND / PEAK MET
76
78
80
82
84
86
88
90
92
94
1
G
W
Peak Demand Peak Met
12.3% Deficit
93 GW
82 GW
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Open Access Regulations have facilitated
power trading in an orderly manner.
Energy agreements and transmission
clearance have to be arranged separately.
Open Access charges are reasonable and
simple to apply.


Current Scenario
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Short-term Trading Volume
Traded Volume in MU
1617
14188
11847
11029
4178
0
4000
8000
12000
16000
FY02 FY03 FY04 FY05 FY 06
*For FY-07: 15 BU Estimated
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Suppliers call for bids from buyers/traders.
Traders compete to win the supply bids.
Buyers have no option but to buy from the
trader having the supply contract.
Due to deficit scenario, suppliers dominate.
Prices of trades electricity have been going up.
Most of the bilateral trading is inter-regional;
- ER, NER are suppliers
- NR, WR are buyers

Current Scenario
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Price trend of traded electricity
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Need to curb sellers domination
Need to put on end to profiteering
Need to organize short term trading on a transparent,
equitable and efficient platform
Need to increase the supplies
Need to bring surplus captive generation into the grid.
Need to encourage peaking power plants and merchant
generation.
For optimum resource management, need to
simultaneously clear energy contracts & transmission
paths.
Current Scenario
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Adequate Inter-state transmission
system, but needs strengthening
Established scheduling, dispatch and
energy accounting procedures
UI accounting system for real time
deviations from schedules
Established RLDCs, SLDCs
Current Scenario
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Market Structure Prior to Electricity Act,
2003 (Bundled)
CGS
IPP

Govt Consent
Generation
+
Transmission
+
Distribution

Consumer
SEB
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Market Structure after Electricity Act, 2003
CGS
STATE
GENCO
IPP
Trader Trader
Discom
Consumer
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Road map for market development
Forward Physical Contracts (Long-term)-
Established;
Moving from Regulated Cost-Plus PPAs to
Tariff-bid based PPAs for new generating
capacity
Forward Physical Contracts (Short-term)-
Established; but non-standard contracts
Day ahead Spot Market thru PX?
Real Time Market (Substituted by UI
mechanism)

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International Experience
Nord Pool
PJM
UK experience
California PX
South Africa/ ESKOM
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Appropriate PX design for India
National power exchange Vs many power
exchanges
Mandatory Vs Voluntary participation
Double side bidding Vs Supply side bidding
Uniform pricing Vs Discriminatory pricing
Day-ahead exchange Vs Same day exchange
Time block for bidding (hourly/half-hourly etc)
Congestion management
Taking care of operational inflexibilities of
generating stations
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NLDC/RLDC Day ahead PX
Clearing House
B B B SB SB SB
A/C
A/C
B: Bidders
SB: Settlement Bank
A/C: Pledged Account &
Collaterals of Clearing House
Members in SB

1- Bidders send their bids to PX.
2- NLDC informs transmission capacity to PX.
3-. Clearing House confirms adequate collaterals of clearing
agents.
4- PX obtains NLDC concurrence before releasing day ahead
Trade schedules.
5 - RLDCs issues day ahead generation & dispatch schedules for
PX participants.
6 - PX issues day ahead trade schedules.
7 - PX issues rolling collateral requirement.
8 - After settlement period Clearing House issues Invoice/Credit
Notes .
9- Settlement Banks debit/credit the appropriate amounts.

2,4,5
3,6,7
1, 6
8
9
9 9
A/C
Function Diagram
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Expectations of a Portfolio Manager
Freedom to sell and buy at short notice
through a single window
No cap at sellers bids
Reasonable cost of purchase
Assured availability
Assured delivery/take off
Assured payments
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Open Access charges for PX schedules would be
socialized.
Transmission losses to be applied on PX
participants as applicable.
Part inter- regional capacities would be assigned
for PX.
RLDC time line and IEGC would be complied.
PX schedules would be firm.

Transmission and System Operation
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Chairman
Advisory Council
Governing Council
CEO
Executive Board
Operations
Settlement & Clearing
Information & Technology
Market Monitoring
PX - Organisation
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Does Px need Licence
Membership to Grid connected entities only
Whether to allow membership to traders
Px- to be a profit or non profit organisation
Role of CERC

Issues- General
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Issues- General
Do we really need a Day-ahead PX,
now or in the near future?
What would be the right time?
How to mandate a national PX by law?
How to organize a national PX?

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Issues- Price Discovery and Bidding
Pricing principles
Bid caps, to have them or not
Can bid caps be effective
Sale price in constrained Market
Can we curb market power/abuse
How can Run of River, Thermal,
Nuclear and Windmill Generators
submit hourly day-ahead bids?


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Issues- Preventing Market Abuse
Common market abuses
1. Bidding above the marginal cost
2. Withholding Capacity
3. Avoiding a platform with lower price caps
What would it feel like if most often the
marginal bids for Market Clearing Price
were of liquid fuel generators?
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Issues- Market Regulation
Defining the Rules of the Game
Enforcing the Rules and Regulations
Market Monitoring
Ensuring Anonymity of Bids
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Issues- Congestion Management
To collect congestion revenue
Or
Not by charging the Buyers of congested
zone at the cost of PX purchase instead of
the price offered by the Buyers?
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THANK YOU