CERC amends power trading norms to introduce category-IV license

In a bid to spurt new companies to partake in the power trading business and add to competition, the Central Electricity Regulatory Commission (CERC) has introduced a lower category of trading licensees, with comparatively lower net-worth requirements, to accommodate the marginal players in the market. As per the first amendment to the Central Electricity Regulatory Commission (Procedure, Terms and Conditions for grant of trading license and other related matters) Regulations, 2009, the power traders have now been segmented into four categories, namely Categories I, II, III and IV, as compared to three, ranging from Category `I` to `III`, under the original version of these regulations, which were notified on February 14, 2009. Accordingly, Category-I traders will continue to have no limit on the volume of electricity to be traded in a year, while a Category-II power trader would be entitled to trade up to 1,500 million units (MU) of electricity per year, throughout the country, except in Jammu & Kashmir. The Category-III and IV traders would be allowed to trade not more than 500 MUs and 100 MUs, respectively, in a year.

Through these amended regulations, the apex electricity regulator has also modified the net worth requirements with respect to grant of a power trading license, adopting a more accomodating stance. Accordingly, a company would have to possess minimum net worth of Rs 50 crore, Rs 15 crore, Rs 5 crore and Rs 1 crore, respectively, to obtain the four categories of licenses. In the original 2009 regulations, the minimum net worth prescribed for the three categories was Rs 50 crore, Rs 25 crore and Rs 5 crore, respectively.