India’s Power Regulator Mandates Audit and Bans Manual Bid Entries to Enhance Transparency in Power Exchanges

The Central Electricity Regulatory Commission (CERC), India’s national power regulator, has mandated a comprehensive audit of the operational processes and software systems used by the country’s three main power exchanges. This decision, aimed at enhancing transparency and neutrality, must be implemented within the next six months. The power exchanges under scrutiny include the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX), which collectively handle about 7-8% of India’s total electricity trading.

This directive follows observations from the CERC’s preliminary examination of the Market Surveillance Committee (MSC) quarterly reports. These reports revealed irregularities such as the manual entry of bids, bid cancellations post-market hours, bids being entered after the market had closed, and unauthorized extensions of market hours. Highlighting the need for adherence to the provisions of the Power Market Regulations (PMR) 2021, the CERC’s order, dated February 21, emphasizes the necessity of a thorough review of the power exchanges’ operations.

The audit comes in the wake of the CERC identifying inconsistencies in the MSC and Risk Assessment and Management Committee (RAMC) reports, which are submitted every three and six months respectively. The commission noted an uptick in manual bid entries and other discrepancies, particularly in the fiscal year 2022-23, and highlighted the need for standardization in report content to foster improvements.

Additionally, the CERC has prohibited the manual entry of bids by exchanges on behalf of their members outside of trading hours, reinforcing the order with a directive issued on February 6 for a shadow pilot on market coupling. This initiative, involving the development of necessary software by Grid India, aims to facilitate the integration of the three power exchanges, further underscoring the regulatory body’s commitment to streamlining and securing India’s power trading mechanisms.