Don't develop forward market for power trading: Par panel

Expressing reservations over development of futures market for trading of power, a Parliamentary panel today said it will result into artificial shortage of electricity which would push prices upwards.
"Allowing forward future trading at this juncture in the power sector will result into manipulations/artificial shortages which will push the prices upwards causing net loss to common customers," a Parliamentary Standing Committee on Energy said in its report on Electricity (Amendment) Bill 2014.
The panel headed by BJP MP Kirit Somaiya explained, "..It won't be feasible to have forward and future contracts/market at this juncture. More than 95 to 98 per cent distribution of power is with discoms/PSUs. Where is question of forward and future trading."

Under the bill, government want to amend Section 66 for developing futures market for trading of power. After the amendment, the electricity commissions would have to follow directions issued by central government for the purpose.
At present under Section 66, the commission's action for the purpose is guided by National Electricity policy.
The committee suggested that upcoming lignite or coal based power plants shall establish renewable energy generation capacity which shall not be less than five per cent of their installed capacity.

However, the bill provides that the renewable energy generation capacity to be set up by these plants shall not be less than 10 per cent of their installed capacity as per the amendment to Section 7 of the Act.

The committee also observed that certain discoms are charging commercial rate of power from educational institutions.
It said, "state like Maharashtra for past several years Rs 10 to Rs 12 per unit commercial rate are being charged even on government aided/charitable schools. Such heavy commercial electricity charges are also collected even from schools which are in slum....(it should) be stopped."
The panel further said that the universal supply obligation should be mandatory for all supply licensees in his area of licence and also in the area which may be assigned to such licensees from time to time with a view to ensure that all such supply licensees are provided a level playing field.

Observing grid security cannot be termed as foolproof, the committee recommended that the role of Central Electricity Regulatory Commission and various Load Dispatch Centres in this regard need to be thoroughly reviewed and wherever it is found not up to the mark, it should be duly strengthened and also accountability should be fixed for any lapses.