CERC asks PXIL to submit business plan

Power Exchange India has sought one-year extension to increase net worth mandatory under regulations

The Central Electricity Regulatory Commission (CERC) has asked Power Exchange India (PXIL) to give a detailed road map along with its business plan, deviation from its last projections and the future projections towards achieving profitability.

PXIL has also been directed to give the time required to achieve the Rs 25-crore net worth prescribed in the Regulation 18 (1) of Central Electricity Regulatory Commission (Power Market) Regulations, 2010 (Power Market Regulations).

CERC in its interim order on April 23, had asked the PXIL to file an affidavit in this regard by May 15. The power regulator has reserved its order on the admission of PXIL’s petition seeking more time to achieve Rs 25 crore net worth.

PXIL’s new Managing Director & Chief Executive M G Raoot confirmed the exchange has sought a one-year extension to achieve a Rs 25 crore net worth. “We will certainly submit our business plan and strategy to garner a considerable market share in the day ahead market and renewable energy certificate (REC) in the near future. He said that PXIL's current daily turnover was three-four million units.  PXIL is promoted by the National Stock Exchange of India Limited and the National Commodity & Derivatives Exchange Limited.

PXIL says it had a paid-capital of Rs 5 crore on the date of notification of the Power Market Regulations on January 20, 2012. CERC had allowed time till January 21, 2011, to achieve the net worth of Rs 25 crore through its order of  May 25, 2010. However, the time was further extended till March 31, 2013.

“Though PXIL has initiated various measures to achieve the prescribed net-worth criteria, the required net-worth has not been achieved due to reasons beyond its control. The average minimum hourly traded volume by the PXIL had increased to 107 Mw in March 2011, whereas the same was 50 to 60 Mw in 2010-11. Hence, PXIL is making a significant increase in daily trade of about 40-50 Mw,” the petitioner said.

Moreover, the total volume traded by the PXIL in the 'Day Ahead' spot market had increased to 619 MUs for the quarter ended March 2011, as compared to 327 MUs in the previous quarter. In the fourth quarter of 2010-11, PXIL had maintained an overall market share of over 16 per cent across all traded products.

PXIL said it has improved its market share in the REC market. However, due to transmission congestion and delay in introduction of other products in the exchange, revenue growth has not happened as expected.

However, CERC observed that PXIL’s management should submit its financial and business plan to show what steps are being taken to improve the operations of power exchange.