PXI alleges discrimination in transmission corridor allocation

Power Exchange India (PXI), the Mumbai-based electricity exchange, has alleged discrimination in allocation of the limited transmission corridor it has to share with its bigger competitor the Indian Energy Exchange (IEX).The National Stock Exchange (NSE)-promoted electricity exchange that accounts for less than five per cent of the Rs 8,600-crore exchange-based short-term trading market in India has knocked on the doors of Central Electricity Regulatory Commission (CERC), seeking change in the allocation methodology.

PXI has alleged its participants are facing discrimination from IEX owing to the current methodology of “pro-rata allocation”, where National Load Dispatch Centre (NLDC) allocates corridor between the two exchanges based on their individual power flow requests. The smaller exchange, therefore, gets lesser quantum of business whereas the bigger exchange gets a larger pie.“Less allocation to the smaller exchange gives a signal to the participants that the trade or volume clearance on PXI would be doubtful and the participants would therefore be more comfortable on the exchange where clearance of volume is much more,” PXI said in a recent petition to CERC.

According to PXI, transmission corridor is a public resource and its allocation should be in line with the policy guiding allocation of any scarce resource. It has proposed a new methodology, which would allow allocation of equal corridor to both the exchanges. IEX, in a hearing on the petition earlier this month, responded to the allegation by arguing the yardstick to measure public good should be social welfare and not the benefit of a single exchange.

“Their volumes are very low. Therefore, they are seeking preferential treatment to gain volumes and business,” said a senior IEX executive. India generates over 900 billion units (BUs) of electricity annually. Around a tenth of this – or 90 BUs -- is traded in the short-term market. The two exchanges, along with bilateral traders, account for 59 per cent of the power traded in the short-term market with a size of Rs 24,500 crore. While IEX has captured 95 per cent of the exchange market, PXI commenced operations a year later.