CERC Proposes New Regulations for Granting Electricity Trading License

Under the new regulations, the minimum net worth requirement has been increased for companies which are applying for licenses


The Central Electricity Regulatory Commission (CERC) has issued a notification to address the procedure, terms, and conditions for the grant of licenses for electricity trading.

The draft notification sets the general, financial, and technical criteria that companies have to achieve to be granted trading licenses. Further, it also mentions the grounds for the cancellation of power trading licenses. The notification also sets trading margins according to the type of contracts among other new norms.

The regulator has proposed net-worth requirement for Category-I trading licensees to ₹750 million ($10.79 million) for trading between 5,000 million units (MUs) and 10,000 MUs. For companies looking to exceed the trade of 10,000 MUs per annum, additional ₹200 million ($2.88 million) net-worth would be required to be proved for every 3,000 MUs.

In terms of trading margins, the CERC mentions that for short-term contracts and contracts through power exchanges, the trading licensee should charge a minimum trading margin of ₹0 per kilowatt-hour (kWh) and a maximum trading margin of seven ₹0.07 ($0.00099)/kWh.

The CERC has mentioned that it will have the power to disqualify for trading licensees in case of fraud, insolvency, and withholding information.

The regulations also layout guidelines in terms of procedure, non-compliance, and penalties imposed on the applicants and approved traders.

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.

In July, CERC granted “Category I Electricity Trading License” to the National Thermal Power Corporation (NTPC) for electricity trading to help the NTPC in implementing renewable projects, especially solar and wind, across the country.

In March 2019, Mercom reported on the CERC’s new guidelines for cross-border power trading, which could be the new frontier for solar growth. In January 2019, the Ministry of Power had issued the guidelines for import and export of electricity and power trading with neighboring countries.

Last year, the CERC proposed granting a Category-I trading license to Refex Energy Limited. The proposal came after the company requested the CERC to grant it a Category I license for inter-state trading of electricity across India.

Shaurya is a staff reporter at MercomIndia.com with experience working in the Indian solar energy industry for the past four years in various roles. Prior to joining Mercom, Shaurya worked with a renewable energy developer and a consulting company. Shaurya holds a Bachelors Degree in Business Management from Lancaster University in the United Kingdom.