CERC proposes round the clock trading on power exchanges

For a product like electricity, an extended trading session for day ahead contingency/intr-aday trades is necessary to ensure round the clock power supply for people

The Central Electricity Regulatory Authority proposes to start round the clock trading in power exchange platforms. 

As per the proposal, the trading of day ahead contingency/intraday contracts be extended round the clock (24 X7) on the power exchange platform.

Officials said, while the need and manner of introduction of ancillary market is being examined by CERC,  standard contracts need to be available on power exchanges for the period between the existing trading auction timelines and the actual delivery of power.

In order to provide grid connected entities with measures to respond optimally and in line with trading mechanism present internationally, extended trading session is necessary.

Thus this proposal aims at bringing the trading window as close as possible to the actual delivery and operates market on 24x7 bases. Especially for a product like electricity, an extended trading session for day ahead contingency/intraday trades is necessary to ensure round the clock power supply for the people.

The salient features of this will be that the existing products for day ahead contingency and intraday markets would continue to be operated by the exchanges.

The timelines for the products are extended for both exchanges so that trading window is open round the clock. Besides, contingency market to be operated for the entire day after completion of day ahead market.

The contracts will be on a rolling basis and as close to real time as possible and the price discovery mechanism remains exactly same as those for the respective products presently.

They further explained for round the clock trading, an evening market will also be introduced.  

The features of the evening market will be that price discovery remains same as that of morning day ahead market but the process is totally independent of the morning market and participants bid again in Day-Ahead auction or market refers to a process where trading takes place on one day for the delivery of electricity the next day.

Market members submit their orders electronically, after which supply and demand are compared and the market price is calculated for each hour of the following day.

Currently the exchanges offer Day-Ahead Market (DAM) allowing transactions in electricity for a day in advance and Term-Ahead Market (TAM) which further comprises of Day-Ahead Contingency, Intra-Day, Daily, Weekly with contracts etc.

In the meanwhile, the regulator CERC is appointing consultants for review of the operations of both exchanges.

The primary  reason for such review as per the terms of the reference is that power exchanges have nationwide operations, have over 3000 participants, handle large financial transactions, interact with multiple stakeholders like banks, generators, discoms etc.

CERC intends to undertake review of the overall regulatory compliance to these Regulations, the robustness of operational processes, the control and checks placed by the power exchanges to ensure business continuity, safeguarding the public interest and absence of any untoward systemic risk.

In this backdrop, the objective of the review is to conduct an overall health check on the functioning of two power exchanges covering compliance to key regulations governing the functioning of power exchanges, robustness of the operational processes, risk management measures in place to ensure business continuity and above all safeguarding of interest of various stakeholders to mitigate any systemic risk.