SC tells high court to avoid delay in MCX-CERC dispute

Apex court dismisses MCX petition on regulating power trading.

The Supreme Court today told the Bombay High Court to avoid delays in deciding a petition on the Central Electricity Regulatory Commission’s authority to rule on forward trading in electricity.

Multi Commodity Exchange (MCX) had approached the SC challenging the CERC in this regard. The SC dismissed it, noting the issue before the HC was similar. The latter heard the matter today and slated the next hearing for April 12.

MCX has challenged CERC’s review order passed on January 11, as well as CERC’s regulations announced on January 20. MCX contended that CERC’s mandate was to regulate only the physical market and not forward markets.

According to MCX, the central power regulator had erred in holding that Section 66 of the Electricity Act bestowed on it the power to regulate forward trading in electricity.

The Section asks CERC to promote the development of a market (including trading) in power.

MCX said CERC was using its resources to usurp jurisdiction over forward and futures contracts, trying to ensure that forward trading in electricity contracts with the option of financial settlement did not take off on commodity exchanges being regulated by the Forward Markets Commission.

CERC contends that the intention of the regulations in question has been to make these forward-looking and to have a long shelf life, with course updations when required.

This has been attempted by introducing the concept of derivatives contracts, financially settled exchange-traded derivatives and other innovative contracts like capacity contracts and renewable energy certificates, it says.

However, derivatives, ancillary services and capacity contracts would be introduced from a date to be notified when the supply-deficit scenarios ebb and there is sufficient liquidity.