Explained: CERC staff paper on Regulatory Oversight on Bidding Behavior in Power Exchanges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Central Electricity Regulatory Commission (CERC) has released a staff paper on Regulatory Oversight of Bidding Behavior in Power Exchanges to address unprecedented situations such as abnormal increases in power prices. The agency has called for comments on the paper until May 31, 2024.

In CY23, the government noted that the Day Ahead Market (DAM) and Real-Time Market (RTM) markets hit the price cap multiple times.

Here is the proposed framework:

1. All sellers must disclose their variable costs and technical parameters monthly, with this information remaining confidential.

2. Each seller’s variable cost will be the Benchmark Supply Offer (BSO) for their supply offer.

3. The designated agency will communicate the BSO for each category of suppliers to the Power Exchanges monthly.

4. Power Exchanges must ensure that a seller’s bid price offer for a time block does not exceed 1.6 times the respective BSO, and the average bid price offer submitted by a seller throughout the day (96 time blocks) does not exceed 1.2 times the respective BSO.

Analysts’ views:

This paper is only a staff document and not a legally binding regulation. However, if implemented, it could negatively impact players with merchant capacity aiming to profit significantly from high merchant tariffs.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow