Central Regulator Introduces Amendments to Trading License Regulations

Amendments have been made to trading fees and grant of trading license regulations


The Central Electricity Regulatory Commission (CERC) has issued amendments to its previous regulations for the payment of fees for electricity trading. The regulations will come into effect from April 01, 2020.

As per the amendments, any person who has been granted permission by the Commission for interstate trading will pay the annual license fee as under:

Annual Fee for Licence of Interstate Trading of Electricity According to 2020 Regulations Compared to 2009

The licensees will pay the annual license fee of their respective categories based on their net worth and electricity volume.

According to the notification, Category III and IV licensees under trading license regulations, 2009, will pay the annual license fee as applicable for Category V licensee under the 2020 regulations.  In 2009, the central body had issued the first regulations for the power trading industry, which had a lower minimum net worth criteria for Category-I licensees.

Similarly, Category II licensees under the trading license regulations, 2009, will pay the annual license fee as applicable for Category IV.

Category I licensees would pay the annual license fee as appropriate for Category I, II, III, or IV licensee based on the volume proposed to be traded during 2020-21.

The central regulatory authority also made amendments to the terms and conditions for the grant of trading license regulations 2020. This will come into force with effect from the date of notification in the official gazette. In August last year, CERC had issued a notification to address the procedure, terms, and conditions for the grant of licenses for electricity trading.

The central Commission also added a new clause, which states that the trading license will be granted provided that the trading margin from either of the parties to the banking transaction is not in the negative (less than zero).

In another new clause, the Commission added that the trading license would be granted if the duration of the short-term contract is more than one month. Also, the letter of credit in favor of the seller should be equivalent to 1.05 times the monthly contract value. The validity period will be equal to the validity of the contract.

Earlier, CERC had granted a ‘Category I Electricity Trading License’ to NTPC Limited for electricity trading. The license will help the NTPC implement renewable projects, especially solar and wind, across the country. Previously Mercom reported that the Ministry of Power issued guidelines for the import and export of electricity and power trading with neighboring countries, replacing its previous guidelines issued in 2016.

Regulatory updates in the renewable energy sector can be hard to keep track of. Subscribe to Mercom’s real-time Regulatory Updates to keep yourself apprised of the latest regulations.