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Power Trading

Power Trading. By P.S.Bami President – India Energy Forum & Former Chairman & Managing Director, NTPC. 1. Trading of Power -Frame work & issues. Definition – Power trading is defined as a transaction, where the parties have freedom to negotiate the price and the quantum of power

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Power Trading

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  1. Power Trading • By • P.S.Bami • President – India Energy Forum • & • Former Chairman & Managing Director, NTPC 1

  2. Trading of Power -Frame work & issues • Definition – Power trading is defined as a • transaction, where the parties have freedom to • negotiate the price and the quantum of power • Power trading evolving scenario prior ES Act to post • ES Act • Consumers served only by SEBs - no other choice • SEBs given share from Central Generating Station • under Gadgil formula • Price fixed by Central / State Govt. 2

  3. Consequences of Lack of Power Trading • Sub optimal utilization of resources • i) Installed capacity of 1,08,000 MW meets peak • demand of 71,000 MW (only 65%), • USA 90%,UK 80% • Power demand affected by season, weather and peak • hours • Some power systems and states have surplus power • A good opportunity for trading and utilization of • capacity 3

  4. Issues affecting Power Trading • Present level of power exchange in power trading is limited • Constraints: • 1. Proper market mechanism not available earlier- now, ABT • 2. Lack of commercial awareness in SEBs and their poor • financial health • 3. Surplus of captive power (20,000 MW) not utilized till ES • Act • 4. Inadequate transmission capacity. • 5. Poor inter regional link • 6. Power Grid transmission generally linked to Central Power Generating Stations • 7. Down stream transmission system weak 4

  5. Post ES Act Scenario • ERC to promote development of market including trading in power as per National Electricity Policy (Section 66) • ERC to specify technical requirement, capital adequacy requirement and credit worthiness for electricity traders • Electricity trader to discharge such duties for supply, trading as specified by ERC (Section 52 (i) & (ii) • ERC to fix the trading margin in the inter state/ intra state trading of electricity (Section – 79 & 86) 5

  6. Supportive Factor for trading under ES Act • Setting up of Generating Stations without license • Non-discrimating access to the transmission system • Gradual introduction of the open access for the distribution system • Freeing of captive power from approvals • Emphasis on competition and consumer choice 6

  7. Draft Regulation for Inter State Trading by CERC (Dec 2003) • The CERC has laid down technical requirements of having professional in Power System operation and in Finance and Commerce • Capital adequacy requirement for six categories of licensees. • Licence fee ranging from Rs 1 lac to Rs. 15 lac for six categories • Licensee to keep separate account of trading business and Commission to specify standards of performance 7

  8. Role of PTC in Power Trading • Set up in April 1999 for Power trading to optimally utilize the existing resources in the country • To promote exchange of power with neighbouring countries • Volume of trading 4,178 million units with turn over of Rs 926 Cr in 2002-03 and profit of Rs 19.5 Cr • PTC nodal agency for Chukha Project 336 MW, and Kurichhu Project 60 MW (Bhutan) • PTC to take power from Tala Project (1020 MW) under construction • PPA signed for WEST Seti Project (750 MW) IN NEPAL. • PTC also introduced “time and day” trading with differential prices. 8

  9. Some Positive Steps for Future • Adequate availability of power • Formation of Transmission highways and strong inter regional • transmission system. • PGCIL to achieve inter Regional transmission capacity of 30,000 MW by 2012 • Strengthening up stream and down –stream transmission network by state utilities • Resolving issues with open access in wheeling charges and surcharge • Framing regulation by all ERC and specify proper criteria to have reliable players. 9

  10. Thank You

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