Process of Power Trading in India:

6.1. To find buyers and sellers:

First and the foremost thing required for trading is to find the buyers and sellers. As power can
not be stored we need buyer and seller at the same point of time. This is done either through Fax,
Telephone or through internet

The first activity for a trading body is to find prospective sellers eg. Power plants (CPP, IPP, and
Merchant Power Plants), DISCOMS (surplus power) and prospective buyers eg. Major
DISCOMS & SEB’s. Tenders are floated by prospective buyers and sellers inviting bids for
purchase or sell. A trader has to capture these tender details and bid. For getting the information
about the tender, a trader has to regularly visit the websites of GENCOS, DISCOMS and SEB.
Often this information is received, by a trader, through fax. There should be a forecasting
mechanism too, to identify prospective buyers and sellers depending on historical data.

6.2. Contract with buyers and sellers

Depending upon the terms and conditions of Notice inviting tender, a trader, has to prepare a bid
on a certain sets of terms and conditions. Basically 80-90% of the terms and conditions remain
same in each and every term-sheet.

The common terms and conditions in the term sheet are as follows:-

a) Quantum of Power: Flow of power for which both parties agree (in MW).
b) Duration: Hours on which power has to be flown.(RTC, peak, off-peak or any
other duration)
c) Contract Period: Period of purchase/sell of Energy (day, month, year etc.)
d) Rate for purchase/sale of energy: There has to be at max. A difference of 4
paisa/KWh in the buy and sale rate of electricity.
 e) Delivery point: It is the point where buyer and seller agree to purchase and sale
of power.
f) Payment security mechanism: As per the general billing cycle a seller can
only get the payment after 18 days. For which seller needs a mechanism for
payment security eg. Letter of credit/Bank guarantee.
g) Billing Cycle: Energy billing is divided in to four weekly cycles (from 1st to 8th,
9th to 15th, 16th to 23rd and 24th to 30/31st).
h) Final Energy Settlement: Weekly Energy billing is being done on provisional
schedules available on website but for final settlement there is a Regional
energy account available on regional electricity board website.
i) Open Access charges: It is borne by buyer / seller. However trader being an
open access customer, first pays open access charges on the behalf of their
clients and later on recovers through open access bill. These charges are paid to
RLDC.
j) Force Majeure: If power flow doesn’t takes place due to some unforeseen
circumstances or act of god, then it is considered as force Majeure and nobody
has to pay a compensation for the deviation in schedules.

6.3. Filling Open Access:

Once Trader receives the Letter of Intent from both buyer and seller the first task is to book the
open access corridor for the power flow. It is of three types:-

 Advanced Reservation Application: An Application for Advance Scheduling for a

Bilateral Transaction may be submitted to the nodal RLDC up to fourth month,
considering the month, in which Application is made, being first month. (Max.
Quarterly)
  First Cum First Serve: Application received under “First Come First Serve”
category for Open Access shall be considered only when transactions are
commencing and terminating in the same calendar month. (Monthly)

 Day Ahead: Applications received within three days prior to the date of scheduling
and up to 15:00 Hrs. of the day immediately preceding the day of scheduling. (Daily)

 Contingency: Application received after 15:00 Hrs for the scheduling of power on
the same day are considered as contingency application. Nodal RLDC always try to
incorporate contingency into day ahead schedules if possible . In case of same day
schedules the transactions shall be scheduled from the 6th time block counting the
block in which acceptance is accorded as the first time block .

6.4. Getting approvals from Regional Load Dispatch Center (RLDC)

Once we file an open access application for our interstate transaction or intrastate transaction.
(Application can be Advanced reservation, First cum first serve, day ahead or contingency) an
approval has to be taken. In case of Inter-state transaction, for each and every application,
approval from RLDC has to be taken and approval from state transmission utility to be taken in
case if intrastate transaction. In both cases the approval bears a unique number for each and
every transaction in the power trading market. There is standard format on which approval is
given by Nodal RLDC's. The standard format (FORMAT –VI) for RLDC approval is given by
Power grid in its open access procedure. These approvals are received through fax.

6.5. Make payments to RLDC against open access:

The approval comes from RLDC or state transmission utility confirming what we had applied
and in turn how much corridor is approved. For booking of corridor open access customer have
to pay transmission charges with in three days due to which a trader first pays the charges by
themselves and then raise bills to corresponding parties or clients according to delivery point.
The procedure of fund transfer is that the trader has to send an e-mail along with the copy of the
approval to finance by next day itself. Every state has its own transmission charge which is
approved by state regulatory commission of their states. (Open access charges data as per
Annexure-1)

6.6. Raise bill to buyers and sellers and payment realization:

For each and every fund transfer to RLDC or state transmission utility we have to raise the bill
against the open access charges paid by us. The calculation of open access charges to be paid by
buyer and seller depends on delivery Point.

(Delivery Point: - It is the point where buyer and seller agrees to purchase and sale of
power)

Example: - CESC to NPCL

STU = State Transmission Utility.

RTS = Regional Transmission System.

IR Link = Inter-Regional Link.

Case 1: delivery point is Seller Exit or WBSEB entry

Delivery point

In this case open access charges payable by:

Seller= 0 (zero).

Buyer= Will bear the total cost of open access charges.

Case 2: Delivery point is WESEB exit or ER entry

Delivery point

In this case Open access charges payable by:

Sellers= West Bengal STU charges.

Buyer= Except West Bengal STU charges, rest of the charges will be born by the Buyer.

Case 3: Delivery point is ER exit or ER-NR entry

Delivery point
In this case open Access charges paid by:

Sellers= West Bengal STU charges + Eastern Region charges.

Buyers= ER-NR Link charges + NR charges +Uttar Pradesh transmission charges.

6.7. Scheduling

As per new open access procedure, there is no need for scheduling of power for advanced
reservation or first cum first serve. However in case of day ahead we have to intimate to the
SLDC and the seller/buyer.

(Schedule is basically an intimation containing the duration, quantum, date, and approval
no. of that particular transaction).

6.7. A) Procedure for scheduling of bilateral transactions First-Come-First- served

basic.

The applications for the grant of open access for the second month, received after the date
specified in clause (4) of regulation 9 and the application for the grant of open access during the
first month shall be considered on First-Come-first-served basic, and such transactions shall be
scheduled subject to availability of the required transmission capacity, provided that such
applications shall reach the nodal agency at least four (4) days in advance of the date of bilateral
transaction.

Further separate application shall be made for each transaction.

All these application shall be processed and decided within three (3) days of their receipt.

6.7. B) Procedure for scheduling for day-ahead transaction:

All applications for bilateral transactions received within three days prior to the date of
scheduling and up to 1500 hrs of the day immediately preceding the date of scheduling shall be
clubbed and treated at par, and shall be processed after processing of the applications fore
collective transactions received till 1500 hrs.

Example:

An application for the scheduling a transaction on 26 th day of the month, shall be processed on
first come first served basic only if such application is received till 22 nd day of the month. If the
application is received on 23rd day or 24th day or up to 1500hrs on 25th day, it shall be treated only
after processing of the applications for collective transaction received up to 1500hrs on 25 th day
for scheduling on 26th day.

6.7. C) Procedure for scheduling of transactions in a contingency:

In the event of contingency, buying utility may locate a source of power to meet short-term
contingency requirement even after the cut off time of 1500 hrs of the preceding day and apply to
the nodal RLDC for open access and scheduling and in that event, the nodal RLDC shall
endeavor to accommodate such request as soon as and to the extent practically feasible, in
accordance with the detailed procedure.

BUYING UTILITIES shall schedule this power offered in full, except in case of transmission
constraints. The scheduling and dispatch of power shall be coordinated with the respective
RLDCs as per the relevant provisions of IEGC and other decisions of RLDCs, RPCs and Delhi
SLDC.

BUYING UTILITIES will give 100% requisition for the total power declared available by
NDMC / PTC on day ahead basis. Shortfall in requisition by BUYING UTILITIES against the
power offered by NDMC / PTC will be liable for payment at the tariff rate.

Without prejudice to the provisions of Force Majeure; if PTC fails to declare availability for the
capacity approved for Open Access for the concerned period at least to the extent of 60% in
energy terms in a month, PTC shall bear proportionate Open Access Transmission charges only
for differential quantum between 60% and actual schedule. For example, in case availability
given by PTC is 50% of Open Access quantity, then PTC will bear 10% of the Open Access
Transmission charges only up to buyer’s periphery.
6.8. Energy billing on basis of provisional schedules:

For Energy flow against each and every transaction (except intra state transaction) the daily
schedule is loaded on RLDC website which is liable for further revision. Once the day
passes then the final schedule after incorporating all the revisions is loaded on RLDC website as
Implemented schedules. The calculation of quantum of energy traded also depends on delivery
Point.

Example: CESC ( Chamundeshwari Electricity Supply Corporation) to NPCL(Noida

Power Corporation Limited)

STU= State Transmission Utility.

RTS= Regional Transmission System.

IR Link= Inter-Regional Link.

Case 1: If delivery point is CESC exit or WBSEB entry.

Delivery point

For billing data is always taken from RLDC website. If delivery point is WBSEB entry then the
data is to be taken back to WB entry by adding losses in the energy quantum.

Energy charges payable by:

Seller= Rates negotiated as per agreement.
Buyer= rates negotiated +trading margin.
Case 2: if delivery point is WBSEB exit or ER entry.

Delivery point

If delivery point is ER entry then the data taken from RLDC website straight away goes to
energy bill in the energy quantum.

Energy charges payable by:

Seller= Rates negotiated as per agreement.

Buyer= Rates negotiated +Trading margin.

Case 3: If delivery point is ER exit or ER-NR entry:

Delivery point

If delivery point is ER exit then we have to subtract the losses of that region from the data
available from RLDC website.

Energy charges payable by:

Seller= Rates negotiated as per agreement.

Buyer= Rates negotiated +Trading margin.

6.9. Final Settlement on the basis of REA:

Final settlement is done on the basis of REA (Regional Energy Account) issued by the regional
power committee. The difference between the REA quantum and billed quantum is settled in
final REA billing

FORMATS USED IN OPEN ACCESS