Power Exchange India Limited (PXIL) has approached the Central Electricity Regulatory Commission (CERC) seeking an extension of two years, until March 31, 2025, to comply with ownership structure requirements outlined in the CERC Power Market Regulations, 2021 (PMR 2021). PXIL, established in 2008, operates in various markets such as the Integrated Day Ahead Market, Real-Time Market, Term Ahead Market, Green Term Ahead Market, Renewable Energy Certificates, and Energy Saving Certificates.
The CERC introduced PMR 2021 on February 15, 2021, superseding the previous regulation from 2010. The new regulations imposed specific time-bound compliances and formed committees for surveillance. PXIL, in response to these directives, filed a petition requesting permission to amend its Bye-Laws, Rules, Business Rules, Energy Saving Certificate Business Rules, and Renewable Energy Certificate Business Rules to align with PMR 2021.
Acknowledging the complexity and time-consuming nature of certain compliances, PXIL sought an extension and compliance reporting under Regulation 15 of PMR 2021. The CERC, after reviewing PXIL’s submissions, issued an order on April 26, 2022, along with directions extending the deadline for specific compliances until March 31, 2023.
In the subsequent hearing on May 25, 2023, PXIL’s counsel detailed the efforts taken to comply with the ownership structure requirements. The petitioner communicated shareholding structure alignment directions to concerned shareholders on April 26, 2022. As of February 28, 2023, PXIL submitted shareholding patterns, and steps were actively taken to meet compliance directives.
The CERC, considering PXIL’s progress and provisional net worth of ₹65.21 Crore (as of December 31, 2022), relaxed the minimum net worth requirement until March 31, 2023, as per Regulation 14 of PMR 2021. However, concerns were raised regarding PXIL’s shareholding pattern, with non-member shareholders exceeding prescribed limits.
To address this, the CERC, in its order, emphasized the importance of a diversified shareholding pattern to prevent dominance by specific shareholders. It directed PXIL to dilute the shareholding of two promoter shareholders, NSE Investments Ltd (NSEIL) and National Commodity & Derivatives Exchange Limited (NCDEX), to 25% by September 30, 2024.
Regarding GMR Energy Limited’s shareholding, the CERC considered legal opinions, noting that GMR Energy Limited’s direct shareholding of 6.84% complied with regulations. However, the Commission cautioned that any future equity shareholding by GMR Energy Limited and GMR Energy Trading Limited should not collectively exceed 25% in PXIL.
For WB State Electricity Distribution Company Limited (WBSEDCL), the CERC emphasized adherence to the demutualized and ring-fenced organization concept, restricting a member or client’s shareholding to 5%. PXIL’s request for an extension until March 31, 2025, was deemed unjustified, and the CERC granted an extension until September 30, 2024, to align with Regulation 15 of PMR 2021.
The CERC, while allowing extensions, underscored the necessity for Power Exchanges to become fully demutualized and ring-fenced organizations. It emphasized that extensions should not be perpetual, and sincere efforts must be made to comply with regulatory requirements.
In a separate directive, PXIL was instructed to file a petition on transaction fees, ensuring completeness and justification as per regulation 23 of PMR 2021. Additionally, PXIL must submit a report on its progress in achieving the required shareholding pattern by December 31, 2023. Failure to comply may lead to regulatory measures following PMR 2021 provisions.
In conclusion, PXIL’s journey toward compliance with PMR 2021 reflects a complex regulatory landscape, with the CERC balancing the need for extensions with the imperative of ensuring a robust and diversified ownership structure in the power exchange sector.
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