In a major development in the power sector that would open gates for power reforms, the Supreme Court resolved the 10 years long pending jurisdictional issue between the Central Electricity Regulatory Commission (CERC) and the Security Exchange Board of India (SEBI).
The 10-year-old case was disposed off by the Apex Court on Wednesday as SEBI and CERC reached a mutually acceptable agreement following an initiative taken by the Union Power Ministry to carry on further reforms in the power sector.
On the initiative taken by the Union Power Ministry, both SEBI and CERC have come to an agreement that CERC would regulate all the physical delivery based forward contracts whereas the financial derivatives would be regulated by SEBI.
In October 2018, the Power Ministry had constituted a committee under the chairmanship of the Additional Secretary, Ministry of Power, with representatives from the Department of Economic Affairs (Ministry of Finance), CERC, Power System Operation Corporation Limited (POSOCO), SEBI, Indian Energy Exchange, Power Exchange of India Limited and Multi Commodity Exchange to examine the technical, operational and legal framework for electricity derivatives and to give recommendation in this regard. Committee submitted its report on October 30, 2019.
In its recommendations the committee suggested that All Ready Delivery Contracts and Non-Transferable Specific Delivery (NTSD) Contracts would be regulated by CERC under specific terms and conditions.
It also recommended that Commodity Derivatives in electricity other than Non-Transferable Specific Delivery (NTSD) Contracts as defined in SCRA would fall under the regulatory purview of SEBI, and a Joint Working Group between SEBI and CERC would be constituted with Terms of Reference as agreed in the Report of the Committee, the Power Ministry said.