CERC Issues New Rules For Allocation Of Transmission Corridors For Power Trading

Highlights :

  • With a third power exchange set to debut soon, CERC has reset the rules governing allocation of transmission corridors to the exchanges.
  • IEX is the dominant market leader with over 90% share of the market, with PXIL a distant second.

Central Electricity Regulatory Commission (CERC) ordered on May 9 that the allocation of transmission corridor among the Power Exchanges shall be governed by a new set of principles from June 1. A bench of four judges under the chairmanship of IS Jha ruled that the old order of 04.04.2016 extending priority allocation of 10% in the constrained corridor in favor of PXIL shall stand superseded.

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CERC Order

CERC Order

The new order has been necessitated by the emergence of two power exchanges, and a third one, that is set to be operationalised soon. The Indian Energy Exchange Limited (IEX) and the Power Exchange India Limited (PXIL) (The smaller exchange, so far)  are the incumbents, while Hindustan Power Exchange Limited‟ has also been granted registration and is likely to be operationalized soon

Interestingly, the commission noted that Pertinently, the priority allocation of 10% in the constrained corridor in favor of PXIL was a temporary measure. Initially, it was granted for six months from April, 2016. However, the same has continued for a period of more than six years. The Commission noted that PXIL has not been able to effectively utilize the facility of priority allocation transmission corridor in the Day Ahead Market. Further, congestion situation has improved during the last few years. On introduction of the Real Time Market in June 2020, no priority allocation in the constrained corridor was assigned to the “smaller Power Exchange” for the transactions in the said Real Time Market and this Market has been running smoothly.

Thus, with the entry of a third exchange, the new order reads, “at the end of bidding session of DAM, all the operating Power Exchanges shall run the process of bid matching, considering all buy and sell bids on their platform”.

In the event of the combined volume for RTM exceeding the ATC (available Transfer Capability), the allocation of available corridor margin between the Power Exchanges shall be in the ratio of the initial unconstrained market clearing volume of RTM in the respective Power Exchanges, and accordingly, this shall be communicated to the Power Exchanges. The Power Exchanges shall thereafter submit the final trades in conformity with the available corridor margin as provided by the NLDC.”

The apex body made it clear that the initial unconstrained market clearing volume derived in this process shall be submitted to the NLDC that shall verify the combined volume cleared in all the Power Exchanges against the ATC for DAM. If the combined cleared volume of the Power Exchanges is within the ATC for Day Ahead transactions, the initial results shall be confirmed by NLDC to the Power Exchanges, read the order further.

In the extreme event of failure of communication between the NLDC and the Power Exchange(s) or for reasons such as data transfer failure, if the final cleared trades are not received by NLDC for scheduling through the RLDCs, or if the information regarding available corridor margin is not received by the Power Order in Exchange(s), the schedules for such RTM session(s) shall be made zero by NLDC.

The entire process as above shall be completed within 15 minutes.

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