Shares of the Indian Energy Exchange rose sharply on August 2 after the power ministry released draft guidelines, seeking to remove a cap on the high-price market segment of power exchanges.
In April, the sector regulator had imposed a cap of Rs 12 per unit on the electricity sold in the high-price power segment in the day ahead market. The cap was imposed to limit the increase in spot power prices.
A new consulting paper by the power ministry, however, has sought to remove the price cap to allow power generators whose variable costs exceed Rs 12 a unit to participate in the power exchanges.
The government has proposed the introduction of a high-price market where sellers with costs greater than Rs 12 a unit will be allowed to sell in this segment. A no objection certificate will be provided to such power sellers on a bi-annual basis.
Follow our live blog for the latest market updates
“This will enable high-cost power plant to be made available during the high demand period,” the power ministry paper said.
The ministry said only buyers who are in a deficit of their power demand and can afford to pay a higher price will be able to participate in the high- price segment of the power exchanges.
If formalised, the move will boost trading volumes and transactions fee for a power exchange like the Indian Energy Exchange. The price cap on spot power traded on IEX had been one of the biggest limiting factors for the exchange as it kept several high-cost suppliers out of the market.
At 11.30 am, shares of the Indian Energy Exchange were up 1.3 percent at Rs 168.9 on the National Stock Exchange.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
