State Trading of Electricity
The Central Electricity Regulatory Commission
(CERC) has issued final Regulations for Inter-State Trading
of Electricity after taking into account the suggestions and
comments received from the stakeholders. The Electricity Act,
2003, recognises trading as an independent activity and accordingly
prescribes issue of trading licences by the CERC for inter-state
trading. The Commission earlier received applications from various
companies for issue of trading licences immediately after the
enactment of the Electricity Act, 2003 and the Commission had
permitted all of them to continue trading till 31.3.2004 or
till the issue of Regulations by the Commission whichever was
earlier. After Notification of Trading Regulations, the interested
parties could file fresh applications before CERC, seeking inter-state
trading licences, in accordance with these Regulations. The
Commission is also initiating actions for preparation of Regulations
for establishment of a market mechanism for electricity. The
Regulations for market mechanism will be done after following
a transparent process as is the normal practice of the Commission.
The highlights of the final Regulations
for inter-state trading are as follows:
1. The Regulations provide for trading carried out bilaterally
between the generating company including captive generating
plant, distribution licensee and electricity trader on the one
hand and the electricity trader and the distribution licensee
on the other.
2. The Inter-State Trading Licence shall be granted for 25 years.
3. The Regulation prescribes the application form for trading
licence. The application fee is Rs.1.00 lakh which is subject
to adjustment after the same is prescribed by the Central Government.
A model licence document is also appended to the Regulations.
4. The Regulations also specify the methodology for publication
of the licence application. The application shall be published
in at least two national English daily newspapers including
one economic newspaper and two local newspapers falling within
the areas of trading, one of which shall be in vernacular. The
entire application shall also be posted on the website.
5. The applicant for the licence shall file his comments on
the objections or suggestions received in response to the public
6. The technical requirements for being an electricity trader
stipulates having at least one full time professional each with
i) Power System Operations and commercial aspects of Power Transfers
ii) Finance, Commerce and Accounts.
7. Capital adequacy requirement for various categories has been