The turf war between the Forwards Market Commission (FMC) and the Central Electricity Regulatory Authority (CERC) over regulatory jurisdiction on power exchanges offering month ahead contracts finally stands resolved.
“We have finally resolved the issue with the Department of Consumer Affairs,” Power Secretary HS Brahma told Hindustan Times.
The row between the two regulators was making it difficult for power exchanges to carry on with futures trading in electricity due to authority being exercised by the commodities watch dog, FMC, in addition to the central power regulator, CERC, which claimed that the mandate to promote development of the power market is vested with it under Section 66 of the Electricity Act, 2003.
The battle between the two regulators had even reached the Bombay High Court, which recommended that the issue be put up before a high-power committee of secretaries, as it involved two regulators.
At the meeting between the secretaries of the power ministry and the Department of Consumer Affairs on Sunday, the department agreed that it would ensure that trading in electricity futures in commodity exchanges was taken out of its ambit.
“On the recommendation of the Ministry of Power, the Department of Consumer Affairs has also agreed that it would also suspend or exempt the operation of the provision of Forwards Contracts (Regulation) Act, 1952 in respect of delivery based term-ahead contracts which are non-transferable specific delivery contracts,” said the minutes of this meeting.
The exemption proposed by the department would even cover the operation of Section 14-A of FCRA in respect of power exchanges. The Section deals with non-transferable specific delivery contracts, as such powers are available to Central Government under section 27 of FCRA.
In the regulators’ row, CERC had maintained that it is the only authority empowered by Parliament to develop electricity market while FMC had even issued notices threatening “criminal prosecution” against power exchanges offering month-ahead contracts.
The FMC claimed trading in electricity futures on the NSE-NCDEX promoted Power Exchange Ltd (PXIL) would be considered illegal since the exchange was not registered with it.