Iex Bulletin

| www.iexindia.com | December 2008 | vol 16, issue 001 |

news and information

INDIAN ENERGY EXCHANGE

bulletin.

For private circulation only

REGULATORY NEWS DERC gives in-principal approval to BSES Gas- based power plant. BSES Limited has received in-principle approval from the Delhi Electricity Regulatory Commission for setting up a 1,400 MW gasbased plant in Tikri village in Delhi at an estimated investment of Rs 7000 Crore. KSERC to continue restriction on HT/EHT consumers. The Kerala State Electricity Regulatory Commission has ordered the Kerala State Electricity Board (KSEB) to continue with the 20 per cent power restrictions on the HT and EHT consumers in the state which was imposed by it in October 2008. It has also asked KSEB to continue levying the 50- paise thermal surcharge from these consumers.

INDUSTRY NEWS GoI appoints a high-level committee for preparing National Renewable Energy Law. The Government of India (GoI) has appointed a high-level committee for preparing the N a t i o n a l R e n e w a b l e E n e r g y L a w. The proposed law will deal with issues of providing Renewable Energy Certificates, strict implementation of renewable purchase obligations and penalty provisions for not adhering to the same. As of now, 12 State Electricity Regulatory Commissions have fixed up to 10 per cent of renewable power purchase obligation in the total power portfolio of their respective states. It will also facilitate tradable Renewable Energy Certificates. India to help Nepal set up power trading entity . India has entered into an agreement with Nepal to help it set up a power trading entity, for exporting power. To end the monopoly of Nepal Electricity Authority, it is proposed to set up Nepal Electricity Regulatory Commission. An agreement has been reached where India will have

a 30 per cent equity stake, while the rest will be owned by Nepal. Currently Nepal will be buying power from India; however by 2013 Nepal is expected to be a power surplus country, thus the transmission line improvement project will be implemented in the next two years at a cost of Rs 200 crore. The Indo-Nepal Power Exchange Committee had identified the Butwal-Gorakhpur; Duhabi-Purnea; DhalkebarMuzaffarpur and Anarmani-Siliguri power transmission corridors for implementation. Naptha goes cheap. The import duty of 10% on naptha is lifted. The power generation cost through such projects is expected to come down by 50-55 paise and the end consumer may reap the benefits.

INTERNATIONAL APX launches UK day-ahead wholesale power auction. APX group launched the first day-ahead power auction aimed at setting a reliable reference price for electricity traded in Britain. NASDAQOMX and NORDPOOL are favoured by some of the biggest players in the UK power market to launch another power exchange next year. EEX to launch spot trading in EUA. The exchange council agreed to the launch of spot trading in EUA on Xetra on January 16, 2009. The EEX Spot Market for EU emission allowances comprises continuous trading with intraday auction. After the end of the Spot Market auction EEX publishes the Carbon Index (Carbix) established on its internet site. Japan to start trading in CO2- free electricity. Japan will begin trading of carbon dioxide-free electricity among power utilities and other power producers as part of its efforts to fight global warming. The trading of this "green electricity "will take place on the Japan Electric Power Exchange. The power industry has a voluntary target of reducing greenhouse gas emissions by 20 percent from the 1990 level on average between 2008 and 2012. Europe to go for Renewable Power Obligation. EU leaders agreed yesterday to combat climate change by ordering that a fifth of Europe's energy mix should come from renewable sources within 12 years. They have set an ambitious target to cut greenhouse gas emissions by 20% by 2020.

IEX Bulletin, Dec. 2008

IEX sponsored "Captive Power Series", organized by IPPAI.

EVENTS IEX participated in Indian Energy Summit 2008 organized by Indian Chamber of Commerce.

IEX sponsored Captive Power Series organized by IPPAI. The conferences were conducted in Mumbai, New Delhi and Ahmedabad on 12th Nov, 08, 3rd Dec, 08 and 10th Dec, 08 respectively. The focus of the conference was to address the issues related to distributed generation, selling of surplus power from captives and renewables.

IEX participated in Indian Energy Summit 2008 organized by Indian Chamber of Commerce from 14th-15th November, 2008 at India Habitat Center, New Delhi. The event marked presence of various dignitaries from Ministry of Power, CEA, CERC, PFC, Tata Power, Alstom, Lanco Infratech, GMR etc. Mr. Rajesh K. Mediratta, VP, IEX delivered presentation on "IEX: New opportunities for power trading." He shared the journey so far by IEX and how it has offered true prices to the participants.

Mr. Rajesh K. Mediratta, VP, IEX, Mr. Bikram Singh, AVP, IEX, and Mr. Ghansham Thakkar, Manager, IEX, delivered presentation on the topic "Selling through IEX" at Delhi, Ahmedabad and Mumbai respectively. The presentation focused on Trading Mechanism, performance of Day Ahead Market and concept and methodology of proposed Term Ahead Market.

IEX TRADING MONITOR

MONTHLY INDICES

For the month of November, 2008

IEX indices for the month of November, 2008

Total Purchase Bids received (MUs)

985

Total Sell Bids received (MUs)

665

Total Market Cleared Volume (MUs)

450

Maximum Price (Rs/kWh)

11

Minimum Price (Rs/kWh)

1.30

INDICES Day Off Peak(11- 18 hrs)

AVERAGE AVERAGE MCP Volume (Rs/kWh) (in MW) 8.20

613

Morning Peak( 7 - 11 hrs)

7.81

617

Night off peak( 00-06, 24 hrs)

6.32

694

Maximum Volume in a day (MUs)

21.44

Non-Peak Hr Avg(1-18& 24)

7.37

654

Total Market Clearing Volume in MUS (till 30th Nov, 2008)

1,412

Peak hr Avg(18- 23)

7.90

457

RTC

7.50

626

** All figures are Hourly average for the month.

Trading Made Easy - Vol IV Open Access and Transmission INTRODUCTION: What is Open Access? Imagine a toll road where the operator has a right to choose who can use the road. Sounds absurd? Everyone knows that there can be no discrimination among users as long as they pay the toll and abide by the traffic rules. This can be described as nondiscriminatory open access to the toll road. Much of the growth and tariff reduction in telecom is the outcome of competition enabled by open access to networks. A consumer can subscribe to a licensee of his choice, as access to other networks is no constraint. Non-discriminatory open access was clearly a pre-requisite of telecom reform. The rationale for power reforms is similar, competition in generation requires open access to the transmission and distribution wires so that any competing producer can use them. Open Access in power supply means that a distribution company will operate the network connecting your premises, but other licensees can also reach you through that network. Thus, a supplier need not lay a parallel network of wires for carrying electricity to your premises; he can use the existing network upon payment of an access charge called the wheeling

charge, to be determined by an independent regulator. Such non-discriminatory open access is a pre-requisite for competition and real reform. Open Access and Transmission: The main provisions of the Electricity Act-2003 which governs the grant of Open Access are given in the functions of Central Transmission Utility and State Transmission Utility. The same are given below: n As per the Section 38(2)(d) of Electricity Act, 2003, the function of the Central Transmission Utility (CTU) is to provide nondiscriminatory open access to its transmission system for use by: (a) any licensee or generating company on payment of the transmission charges; or (b) any consumer as and when such open access is provided by the State Commission under sub-section (2) of Section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the Central Commission. n As per the Section 39(2)(d) of Electricity Act, 2003, the function of the State Transmission Utility (STU) is to provide non-discriminatory open access to its transmission system for use by:(a) any licensee or generating company on payment of the transmission charges; or (b) any consumer as and when

IEX Bulletin, Dec. 2008

such open access is provided by the State Commission under sub-section (2) of Section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission. For better understanding of Open Access let us go through the "(Open Access in inter-State Transmission) Regulations, 2008 "issued by Hon'ble CERC dated 25th January, 2008.The regulation only covers Short Term Open Access Transactions however Long Term Open Access Transactions is covered under "Open Access in Inter-state Transmission) Regulations, 2004" .

The Open Access in Inter State Transmission has been categorized as: 1. Long term Access

Duration: 25 years or more

2. Short term Access: Maximum 3 months in advance 3. Monthly • Advance • First Come First Serve 4. Day ahead 5. Intra day transactions

OPEN ACCESS TIME LINE FOR SHORT TERM CAPACITY RESERVATION Last day for Advance Application for Month 2

DL-10

Month 1

DL-5

DL

DL+5

Month 2

{ {

Last day for Adv Application for Month 3 RLDC's Approvals for Month 2 Last day for Adv Application for Month 4 RLDC's Approvals for Month 3

RLDC's Approvals for Month 4 FCFS Application

DOP - 4 DOP - 1 DOP

Day-Ahead Application / IEX Collective Transaction Intra Day Application

Month 3

Month 4

Bilateral vs. Collective Transactions: The Open Access in inter-State Transmission Regulation, 2008 has categorized Short Term Open Access transactions as Bilateral and Collective (through IEX). Bilateral Transactions: A transaction for exchange of energy (MWh) between a specified buyer and a specified seller, directly or

Note: DOP : Day of Operation DL : Last day of Month 1

through a trading licensee, from a specified point of injection to a specified point of drawal for a fixed or varying quantum of power (MW) for any time period during a month. Collective Transactions: is defined as a set of transactions discovered in power exchange through anonymous, simultaneous competitive bidding by buyers and sellers.

IEX Bulletin, Dec. 2008

Features of Bilateral And Collective (IEX) transactions as per Open Access in inter-State Transmission Regulations, 2008 Dimension

Bilateral

Collective (IEX)

Open Access Duration Nodal Agency

Up to 3 months and Intra Day Regional Load Dispatch Centre (RLDCs) Rs.30/MWh - intra- regional Rs.60/MWh - Between adjacent regions Rs. 90/MWh - Wheeling through one or more region Charged in Rs/MWh Based on reserved capacity in MWh E-Bidding without any price cap Frequency-linked-Unscheduled Interchange (UI) Minimum 5 days notice

Only Day ahead National Load Dispatch Centre (NLDC)

Transmission Charges Short Term (ST) Rate Congestion Management Balancing Mechanism Revision of Schedules

Rs. 30/MWh for each point of injection and drawal Charged in Rs/MWh Based on Scheduled Energy Market splitting (NLDC in coordination with IEX) Frequency-linked-Unscheduled Interchange (UI) No Revision (Shashwat Srivastava)

Readers Corner "I really appreciate the initiative take n by IEX in apprising the readers of its bulletin on the latest events and regulations related to power sector. Th e Monitoring Report & Monthly Indices will provide valuabl e input to both sellers and buyers on the market dynamics…." Mr. M.K.Ray Ex-Director (Commercial) WB State Elec. Dist Co..Ltd. "IEX bulletin has set an example t o know how trading takes place along with spreading knowledge among common people about CERC norms. " Keep ahead of all All the best Mr. Veeresh Devaramani JSW Energy Limited Bellary, Karnataka

Dear Readers, Thank you for the response, you are requested to drop in with your valuable feedback to help us in our effort to make this bulletin as informative as possible and to meet your expectations. Just mail at nitin.s [email protected] or send it to IEX corporate office.

MEMBERSHIP APPLICATIONS INVITED Indian Energy Exchange Ltd. (IEX) invites membership applications from Generators, MPPs, IPPs, CPPs, Distribution Licensees, Bulk Consumers and Electricity Traders. For application forms, and terms and conditions, please contact our Membership Section on 011- 4300 4044 or download from www.iexindia.com or email at: [email protected]. All memberships are subject to necessary regulatory compliance

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This bulletin has been compiled by Indian Energy Exchange Limited for circulation among direct stakeholders in the energy market of India. Though the contents of this bulletin are correct to the best of our knowledge at the time of printing, IEX does not vouch for their accuracy.