The Central Electricity Regulatory Commission (CERC) has ordered an audit of the processes and software deployed by the country's three power exchanges in the next six months citing the need to be "transparent and neutral".
Besides, the national power regulator also barred the bourses from manually registering bids after trading hours due to “increasing instances" of violation of rules.
Power exchanges — Indian Energy Exchange (IEX), Power Exchange India (PXIL) and Hindustan Power Exchange (HPX) — account for around 7-8 per cent of the total electricity trading in the country.
The audit has been ordered after the regulator, on preliminary scrutiny of the quarterly Market Surveillance Committee (MSC) reports, observed instances of manual entry of bids, cancellation of bids after market hours, entry of bids after the market hours, and extension of market hours, etc.
“The Commission is of the considered view that a comprehensive review of the operation of power exchanges is necessary in order to ascertain that the affairs of power exchanges are carried out in compliance with provisions of the PMR 2021,” the order dated February 21 stated.
IEX Executive Director (Business Development, Strategy and Regulatory Affairs) Rohit Bajaj said the CERC has worked towards bringing transparency and building strong frameworks for the exchanges over the years. "This order of the CERC issued is another step in that direction, which will bring more transparency, further strengthen regulatory practices and lead to continuous improvement in the functioning of the exchanges," he said.
Satyajit Ganguly, MD and CEO of Power Exchange India Limited (PXIL), said the company has already initiated steps as per the directions of the CERC. "PXIL welcomes the measures initiated by CERC. PXIL has already initiated collaboration with clients and members to ensure the effective dissemination and implementation of the regulatory directives,
demonstrating a commitment to upholding the letter and spirit of the
order," he said.
No uniformity
The CERC also cited the MSC reports and Risk Assessment and Management Committee (RAMC) reports that are submitted every three and six months respectively by the exchanges, and said there is no uniformity in the contents of the reports and that there is a need to bring in improvements.
“On perusal of the reports for the period Q1 2019-20 to Q3 2023-24, it is observed that while the instances of such assistance were few initially, there has been an increasing trend of such instances in the recent past, especially in 2022-23. Notably, some of the major buyer and seller members of these exchanges have repeatedly had their bids manually entered through their respective power exchanges," read the order.
Consequently, the CERC directed that there shall be no manual entry of bids by the exchanges on behalf of their members on or after trading hours.
This comes days after the CERC on February 6 ordered for a shadow pilot on market coupling of India's power exchanges. In the notice, CERC said that Grid India will develop the necessary software over the next two months to run a shadow pilot for market coupling of the three power exchanges.
(This story has been updated with the comments sent by PXIL)
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