CERC increases trading margin for inter state trading

13-Jan-2010 Vinod Kumar Gupta mynews.in

New Delhi: Central Electricity Regulatory Commission (CERC) has increased the trading margin for inter-state trading in electricity to the benefit of big power suppliers.
Alok Kumar Secretary CERC in a press note said that the trading margin shall apply only to short term buy – short term sell contracts for the inter-state trading. Trading margin shall not exceed 4 paise per unit if the sell price of electricity is less than or equal to Rs.3 per unit. The ceiling oftrading margin shall be 7 paise per unit in case the sell price of electricity exceeds Rs.3 per unit.
CERC has made clear that if more than one trading licensees are involved in a chain of transactions; the ceiling on trading margin shall include the trading margins charged by all the traders put together. In other words, traders cannot circumvent the ceiling by routing the electricity through multipletransactions.
The new ceiling rates on trading margin would come into force after a period of one month.
It may be mentioned that CERC had earlier fixed a trading margin of 4 paise per unit in year 2006.The earlier regulations were reviewed keeping in view the increase in the risk.
Long term agreements have been exempted from trading margin in order to facilitate innovative products and contracts for new capacity addition which
involve higher risk in transactions. Also the trading margin on long term contracts was not consistent with the tariff based competitive bidding guidelines which envisage discovery of electricity prices through competition among the suppliers.