FMC challenges HC order over power futures trading

The Forward Markets Commission (FMC) today moved the Supreme Court challenging the Bombay High Court order which said neither the commodity regulator nor the power watchdog CERC has the exclusive regulation over futures trading in electricity.

The Central Electricity Regulatory Commission (CERC) and the Multi-Commodity Exchange of India (MCX) have already approached the apex court and their pleas against the HC order were admitted on July 6.

Admitting the FMC's petition, a bench of justices GS Singhvi and HL Dattu directed CERC and others to file their replies within two weeks.

The bench also said that it would pass an interim order in this dispute in the next hearing.

Meanwhile, Power Exchange of India (PEI), which was given approval by CERC to start futures trading in electricity, has moved the apex court seeking direction that till the matter is pending the power regulator should have jurisdiction.

The exchange (PEI) has submitted that after the high court judgement a vacuum has been created as the sector is neither regulated by CERC nor FMC.

However, the bench said that it would examine PEI's submission only in the next hearing, when it would pass the interim order.

It also issued notices to CERC, FMC and MCX over the PEI's application.

In its petition, CERC contended that the high court failed to appreciate that the power regulator has been granted exclusive rights by the government on any kind of electricity trade through the Electricity Act, 2003.

The dispute started after FMC had given permission to MCX in January 2009 to start futures trading in the power sector.

Following it, PEI approached CERC to restrain MCX from launching derivatives trading in power, which on April 4, 2009, passed an order saying that it has the sole jurisdiction over futures trading in electricity. It further said that any such firm which is approved by it need not to approach FMC.

This was challenged by FMC before the high court contending that CERC has exceeded its regulatory power and it was within its right to authorise MCX to start trading.

Moreover, on January 2010, CERC notified Central Electricity Regulatory Commission (Power Market) Regulation and claimed power to deal in futures trade in power. It also empowered PEI to deal in power derivatives.

It was also challenged by MCX before the high court, which finally decided the matter in February this year.