IEX says market coupling will kill innovation, move akin to clubbing Ola, Uber

IEX Chairman and Managing Director SN Goel.

Power trading exchange IEX has expressed apprehension over the need for consultation on market coupling in spot power trading. Under selling pressure in the stock market over fear of business impact, Chairman and Managing Director SN Goel in an exclusive conversation with CNBC-TV18 said the interpretation of market coupling can kill innovation and competition in the sector.

However, he is confident that Central Electricity Regulatory Commission (CERC), a key regulator of power will seek stakeholder consultations before any changes in the market design. He added that it is the role of the power exchange to do price discovery, as directed by CERC guidlines.

Market coupling refers to forming of a single power trading entity owned by the government where price discovery will happen with power getting dispatched to short-term power trading platforms.

Goel elucidated the concept of market coupling, saying , "when you have different geographies and the markets are operating in these geographies, you couple these geographies to take advantage of diversity in demand and supply in these geographies."

He pointed out, "Europe has done these things, and to be more precise 26 Europeans countries did the market coupling to integrate and take advantage of the difference sources of power and demand variations."

Also Read: One Nation, One Grid, One Price | India plans market coupling in power trade

“In India, we have one market in the country and I don’t understand this market coupling what we are talking of that different exchanges will be coupled … this will be something like couple BSE and NSE or Ola and Uber ... that doesn’t make a real business case and it will basically kill the competition in the sector,” explained Goel.

Also Read: Market coupling casts a shadow on IEX. What should investors do?

Correct intepretation?

Further, the IEX chief said that he does not understand the interpretation of the market coupling, which has been floating around recently, is the right interpretation.

The (power) ministry has, however, asked the CERC (Central Electricity Regulatory Commission) to look into this and the CERC will certainly analyse whether in the present market design, which is a voluntary market, market coupling has a place, he said.

The price discovery has to happen only at the exchange and the role of the power exchange has to decide how the price discovery is to be done, he emphasised.

"I'm sure the regulator will look into these things. If required they will initiate consultation if they want to implement this, and they will have to construct the design of the market. So it's a long drawn process," the IEX chief said.

Shares of IEX on the NSE fell on June 9 to Rs 122.60, down 10.15 percent, after the Centre came out with a directive to expedite the consultation process and finalise the implementation of market coupling.

Meanwhile, IEX is the most trusted platform for price determination in the country, hosting over 90 percent power deals in the country.