www.iexindia.com | 1

• OpenAccessChargesa Rate of Charges applicable for the FY 2013-14 shall

be:

b Transmission losses : 1.85%c Distribution losses : 17% d Cross subsidy surcharge: Rs 0.40/kWh

(For more details:http://www.uerc.gov.in)

REGULATORYNEWS

BulletinJUNE2013,ISSUE65

News and Information

INTHISISSUE

On May 6, UERC issued tariff order for the period from FY-14 to FY-16. The key highlights of the Order are as follows:

• HTIndustrialTariff- Energy charges increased by ~6% and fixed charges

were increased by Rs. 10/kVA/month of billable demand

HT Industry having contracted load above 88kVA/75 kW (100 BHP)

Contracted Load More than 1000 kVA

Existing TariffRevised Tariff approved

by the Commission

Energy Charges

(Rs./kVAh)

Fixed Charges (Rs./kVA)

Energy Charges

(Rs./kVAh)

Fixed Charges (Rs./kVA)

Upto 33% 2.85 Rs. 260/

kVA of the

billable

demand

3.05 Rs. 270/

kVA of the

billable

demand

Above 33% and

upto 50%3.10 3.30

Above 50% 3.40 3.60

Approved for FY 2013-14 Rs./MW/day Per unit values

Transmission charge 3022.77 ~ 12 paise/kWh

Wheeling charge 7302.22 ~ 30 paise/kWh

UERCissuesMYTOrderforUPCLforFY2013-14toFY2015-16

REGULATORYNEWS1

UERC issues MYT Order for UPCL for FY 2013-14 to FY 2015-16

KERC issues tariff orders for the electricity supply companies in Karnataka

GUVNL files petition under GERC for determination of Additional Surcharge to be levied on open access consumers

INDUSTRYNEWS3

May Paradox: Peaking temperature and falling electricity prices at the exchange

Ten States show willingness to adopt debt recast plan for Discoms

FOCUSOFTHEMONTH 4

Ancillary Market in the Indian Context

RENEWABLENEWS5

Weak RPO Compliance continues to decelerate the Renewable Energy Certificate Market

Germany to allocate Euro 1 Billion towards building green energy corridors in India

IEXTRADEINFO–MAY’136

In this Issue

| www.iexindia.com2

On 6 May, 2013 KERC issued Tariff Orders for BESCOM, CESC, MESCOM, HESCOM, GESCOM & KPTCL. The highlights of the tariff order are as follows:

• The Commission has increased the price cap to Rs.4.50 per unit for power procured by ESCOMs on short term basis as against the cap of Rs.4.00 per unit imposed earlier.

• Tariff- Green tariff has been reduced by 50 paise per unit

against the earlier rate of Re.1.0 per unit.

- HTTariff: For the HT industrial users in BBMP and other City Municipal Corporation areas, the new tariff will be Rs.5.35 per unit for the first one lakh units and Rs 5.75 per unit for consumption beyond one lakh units. In all other areas, the new rates will be Rs 5.35 and Rs 5.65 respectively with a demand charge of Rs 170 per kVA of billed demand per month.

• OpenAccesscharges:a Cross subsidy surcharge for HT industries:

- 66 kV and above: 64 paisa per unit- HT level (11 kV/33 kV): 31 paisa per unit

b Wheeling charges to range from 33 paise per unit to 75 paise per unit

c Transmission charges for short term open access consumers

KERC has mandated time of the day tariff for installations under HT2 (a) and HT2(b) with contract demand of 500KVA and above.

(For more details: http://www.kerc.org/)

Category TransmissionCharges(Rs/MW)

More than 12 hrs & upto 24 hrs in a day in one block

784.46

More than 6 hrs & upto 12 hrs in a day in one block

392.23

Upto 6 hrs in a day in one block 196.11

GUVNL has filed a petition before the Commission to determine the additional surcharge payable by the open access customers to meet the fixed cost of distribution licensees arising out of their obligation to supply. An oral order was issued on 10 May 2013 by GERC for next hearing and suggestions required from concerned stake holders.

GUVNLfilespetitionunderGERCfordeterminationofAdditionalSurchargetobeleviedonopenaccessconsumers

GUVNL has proposed to impose addition surcharge of Rs.1.35 on open access consumers on quantum of power purchase through open access. GUVNL has been asked to publish the petition in the newspaper and on their website for comments from stakeholders.

(For more details:http://www.guvnl.com)

KERCissuesTariffordersfortheelectricitysupplycompaniesinKarnataka

www.iexindia.com | 3

INDUSTRYNEWS

In India, the total installed capacity of 211 GW is in excess of 35% of the total peak demand in the country which was close to 135 GW for the year 2012-13. Whereas the peak demand actually met was only to the extent of 123 GW, thereby leading to an ‘Unserved Demand’ of 12 GW. Evidently, the issue is not with the availability of adequate generation capacity but with the non-availability of generation capacity due to the prevailing fuel shortages and then followed by non utilization due to inadequacy in the evacuation system and inability of the cash strapped discoms to purchase power to serve the needs of the consumers.

Analysis of the Day-Ahead Market at IEX shows the same phenomenon where the total monthly sell bids received were 3887 MUs, higher than the total buy bids of 3271 MUs in the market indicating an over-supply situation. As a result the prices of electricity discovered at IEX came down substantially. The prices discovered on the exchange in the recent months are lower than the prices that prevailed earlier this year as well as prices in the last summer. The unconstrained price has come down from Rs 3.42 per unit in May ’12 to Rs. 2.73 in May ’13. Similarly the area prices showed a downward trend as compared to the same month last year.

As compared to the last month the unconstrained price fell down by 15% from Rs 3.16 per unit in April ’13. The area prices were also lower than the values in the previous month. Even the constrained regions of south experienced lower prices this month, with average area price falling from Rs. 8.41 per unit in April ’13 to 6.47 Rs per unit in May ’13, a drop of 23%.

While no Discoms are utilizing cheaper power from the exchange as an alternate to load shedding, many industries are utilizing the exchange as an alternate to costly power

BidArea May’13 May’12%

changeApril’13

%change

North-East

(A1,A2)

2.32 4 -42% 2.75 -16%

East (E1,E2) 2.31 3.21 -28% 2.6 -11%

North (N1,N2) 2.36 3.21 -26% 2.67 -12%

North (N3) 2.36 3.21 -26% 2.67 -12%

South (S1) 6.47 8.13 -20% 7.83 -17%

South (S2) 6.47 8.13 -20% 8.41 -23%

West (W1,W2) 2.36 3.21 -26% 2.67 -12%

West (W3) 2.36 3.21 -26% 2.67 -12%

UN_MCP* 2.73 3.42 -20% 3.16 -14%

*UN_MCP: Unconstrained market clearing price refers to the price discov-ered before accounting for any congestion in the transmission corridor

through diesel generator sets. In the month of May, the average participation at IEX in the day-ahead electricity market was 1297, higher from 1244 in the month of April ’13, whereas the maximum participation of 1394 was observed on May 24 which was the hottest day of the year, with the average daily traded volume hovered around 80.6 MUs in May ’13.

There was also a substantial decrease in the congested volume in May ’13 as compared to the previous month primarily due to more wind generations in Tamil Nadu which relieved the shortages in the state. The volume lost due to congestion in May’13 was close to 362.8 MUs whereas in April’13 the same touched 521.4 MUs, a drop of 30%.

TenStatesshowwillingnesstoadoptdebtrecastplanforDiscoms

The financial restructuring scheme formulated by the Government of India for restructuring of the short term loans of the state owned Discoms facing difficulty in financing operational losses has received confirmation from 10 states so far. The states to have conveyed their in-principle willingness to participate in the scheme are: Andhra Pradesh, Bihar, Haryana, Himachal Pradesh, Jharkhand, Kerala, Meghalaya, Rajasthan, Tamil Nadu and Uttar Pradesh.

Major outline of the scheme includes: 1 Restructuring of outstanding short term liabilities of

the discoms. - 50% to be converted to bonds backed by state

government guarantees, rest to be rescheduled by the lenders with moratorium on principle repayment.

2 The scheme also focuses on measures required to ensure long-term financial and commercial viability by way of Financial Restructuring, Tariff Setting & Revenue Realization, Subsidy, Metering, Audit & Accounts and Monitoring at state and centre level.

(For more details: http://pib.nic.in/newsite/erelease.aspx)

May ’13 May ’12 (Same month

last year)

April ’13

Avg. daily cleared volume (MUs)

80.62 44.78 83.85

MayParadox:Peakingtemperatureandfallingelectricitypricesattheexchange

| www.iexindia.com4

The grid disturbance episodes on 30 and 31 July, 2012 have drawn the attention of the policy makers to a very relevant issue of ensuring grid stability and reliability in the country. With the restructuring of the power sector, the responsibility of ensuring grid stability has been entrusted upon the system operators i.e. the Load Dispatch Centers at the state, regional and national levels.

For any power system to operate efficiently, two unique requirements which must be continuously and exactly satisfied in order to maintain overall system stability and reliability is to maintain a constant balance between generation and load and to adjust generation to manage power flows within the constraints of individual transmission facilities. Therefore, system operators need some resources to balance grid during contingencies at short notice. These resources are commonly known as ancillary services. In cost-plus regulated regime, these resources can be built and operated under the instructions of system operators. However, in competitive, de-regulated regime, developing markets for such resources is a need.

A general classification of ancillary services is given below:

FOCUSOFTHEMONTH

capacity due to un-dispatched surpluses and the un-cleared bids in the day-ahead market at the two power exchanges operating in the country can be aggregated to create the Ancillary Market.

As such we need to create a market place to equip the system operator to aid in ensuring grid reliability by providing support services. The broad principles to govern the operations of such a market would entail:

1. Maintain grid frequency / voltage and other quality parameters within band as specified in Indian Electricity Grid Code (IEGC).

2. Encourage qualified resources to support system by participating in the market

3. Resource pricing should be market-based

The recent staff paper by Central Electricity Regulatory Commission (CERC) on April ’13 on Introduction of Ancillary Services in Indian Electricity Market’ touches upon the nuances and issues associated with the ancillary market design. Although the finer peculiarity of the operations of

AncillaryServicesMarketintheIndianContext

Presently, in the Indian context, it is envisioned that a Frequency Support Ancillary Service (FSAS) would help in improving the reliability of the operating system by harnessing the unutilized generation units with capabilities of ramping up in about 30 minutes. Currently, over 20,000 MW of bottled up generation is estimated to be present in the country and close to 1000 MW of capacity is left unutilized in the Day-Ahead Markets at exchanges. Such idle generation

such a market needs to be worked out, the overall market is perceived to operate through the exchanges approved by CERC. Once implemented, the ancillary services will serve as an ‘insurance’ product which would help in maintaining system reliability & security available directly to system operators at regional and national level.

(For more details: http://www.cercind.gov.in)

www.iexindia.com | 5

RENEWABLENEWS

Non-solarREC

SolarREC

Trade Volume (REC) 18,543 669

Sale Bid (REC) 12,80,605 2,113

Purchase Bid (REC) 18,543 862

Price discovered (Rs/REC) 1,500 11,490

No of Participants 517 113

The second Renewable Energy Certificate (REC) trading session of FY 14 held on 29 May, 2013 at IEX featured the trade of 18,543 N-Solar and 669 Solar RECs. The session witnessed participation largely from the open-access consumers. Whereas, the key obligated entities viz. the distribution companies and captive power generators were very low on participation in the market despite the fact that many of these entities are yet to fulfill a large share of their obligation. As a result, of the large inventory of 22.45 lacs available in the market over 21.9 lacs RECs were left unsold, the traded price of non-solar continues to remain at floor price i.e. 1500/REC for the tenth consecutive month. The solar REC traded at Rs 11,490/REC in this session vis-à-vis Rs 12,206 per REC in the April ’13 session. This trading session featured 630 market participants of which 517 participated in non-solar segment while 113 participated in the solar segment. Overall participation showed a 5% increase over the previous session owing to 45% increase in participation in the solar segment.

ParticipationDetails(ason31May’13)TotalNo.ofregisteredparticipants 1,675

ObligatedEntity 1,222

DISCOMs 27

Open access consumers 1,130

Captive Consumers 65

Voluntary 13

EligibleEntity(PrivateGenerators) 440

Highestparticipationinasinglemonth

sinceinception(March‘13)1,135

An overview of participation in the REC Market at IEX:

During the recent high level delegation visit to Berlin led by the Minister of Power, Shri Jyotiraditya Scindia, Germany has committed to provide developmental and technical assistance of Euro 1 Billion to India for building green energy corridors. As per the statement, the Green Energy Corridors will enable evacuation of over 30,000 MW of renewable energy generated from wind and solar power during the 12th Five Year Plan in India into the national grid. Shri Scindia

WeakRPOCompliancecontinuestodeceleratetheRenewableEnergyCertificateMarket

GermanytoallocateEuro1BilliontowardsbuildinggreenenergycorridorsinIndia

had detailed discussions with Germany’s Minister of State for Economic Co-operation & Development Gudrun Kopp on the implementation of the Joint Declaration of Intent on Establishment of Green Energy Corridors signed during Prime Minister Dr. Manmohan Singh’s visit to Berlin last month.

(Read More: http://pib.nic.in/newsite/erelease.aspx)

Summary of the REC trading session held on 29 May, 2013 at IEX is as below:

| www.iexindia.com6

Area Min Max RTC*

(0-24hr)

Peak*

(18-23hr)

NonPeak*

(1-17&24hr)

Night*

(1-6&24hr)

East 1.00 3.76 2.31 2.37 2.30 2.27

North East 1.00 3.76 2.32 2.37 2.30 2.27

North/West 1.03 3.76 2.36 2.39 2.34 2.34

South 2.38 16.00 6.47 7.99 5.97 5.75

* Simple Average of Area Clearing Prices for specified duration of time

ParticipationDetails(ason31May’13)

Total No. of registered participants 2,114

Open access consumers 1,902

Private Generators 172

Highest participation in a day since inception (24 May, 2013) 1,394

IEXTRADEINFO-MAY2013

Total Volume (MUs) 2499.31 Average Daily Volume (MWh) 80,624

DAY-AHEADMARKET

DAMSnapshot

Volume(inMUs)

Purchase Bids 3,271

Sale Bids 3,887

Unconstrained Market Cleared Volume 2,862

Constrained MCV 2,499

Cumulative Market Clearing Volume (April ‘13 onwards)

5,015

Maximum Unconstrained Volume in a day 108.99

Daily Constrained Average Volume 80.6

AverageDailyVolume(inMW)

Purchase Bids 4,397

Sale Bids 5,225

Unconstrained Market Cleared Volume 3,847

Constrained Market Cleared Volume 3,359

MCP(Rs/kWh)

Average 2.72

Minimum 2.00

Maximum 3.7

www.iexindia.com | 7

TERM-AHEADMARKET

Contracts Weekly Intraday Day-aheadContingency Daily

Total Volume (MUs)* 1,500 3,362 - -

Max price (Rs/kWh) 3.35 3.40 - -

Min price (Rs/kWh) 3.35 2.15 - -

*Scheduled Volume in the month

RECMARKET:PRICES&VOLUME29MAY2013

PurchaseBids(REC) SellBids(REC) Cleared(REC) Price(Rs./REC)

Non-Solar 18,543 1,280,605 18,543 1,500

Solar 862 2,113 669 11,490

1REC=1MWh

CONGESTIONPROFILE-MAY2013

NUMBEROFPROJECTSUNDERTHERECMECHANISM

Accredited 810

Registered 738

*No congestion between S1 and S2 for the month as the corridor availability for short-term was increased due to non-commissioning of Kudamkulum Unit- I

| www.iexindia.com8

IndianEnergyExchangeLtd.CorporateOffice: 100A/1 Ground Floor, Capital Court, Olof Palme Marg, Munirka, New Delhi - 110067, India.

TelNo.:+91-11-43004000•FaxNo.:+91-11-43004015RegisteredOffice:1st Floor, Malkani Chamber, Off Nehru Road, Vile Parle (E), Mumbai - 400099.

Dear Team,

Team IEX has put in indelible efforts to share the new concept of Power Exchange with all its stakeholders in India’s Power Sector through this bulletin and thereby imparting knowhow on the power trading. Very good work, easy to comprehend and

enables better decision making in electricity industry. Looking forward to IEX’s growth.

DrShreeRamanDubeyHinduja Group

FEEDBACKFORTHEMONTH

Dear Team IEX,

Every single IEX bulletin provides valuable insights about the Power market. Keep up the good work!!!

RishuGargAssociate Manager- Strategic Planning Group GMR Energy

Dear Readers,

We thank you for the encouraging response and support towards the IEX bulletin. In our effort to make this bulletin as informative as possible, we request you to please mail us your suggestions and valuable feedback on: shilpy.dewan@iexindia.com or alternately you could also write in to us at our corporate address given below.

Warm regards,TeamIEX

SolarMarketsinIndia

7-8 May, New Delhi

Mr. Rajesh K. Mediratta, Director (BD) chaired the session on Solar RPO, REC Framework andFinancing

PoweringtheFuture-Solutionsforreformingdistribution

8 May, Patna

Mr. Rajesh K. Mediratta, Director (BD) made a presentation on “Power market scenario - BiharPerspectives”

RenewableOptionsforCaptivePower

27 May, New Delhi

Mr. Bikram Singh Guram, AVP (BD) made a presentation on “PowerSaleandotherrevenueopportunity”

GridWorld2013

28-29 May, New Delhi

Mr. Bikram Singh Guram, AVP (BD) made a presentation on “PowertradingthroughPowerExchanges”

EVENTS

Disclaimer The information featured in this bulletin has been compiled from sources deemed reliable and to the best of our knowledge. Whilst every effort has been made to ensure the accuracy of the information, IEX will not be held responsible for any errors or omissions neither will it be liable for damages nor losses suffered, personal or otherwise, due to the information contained in this bulletin.