ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION
Intra-state Electricity TradING
Regulation No.6 of 2005
Introduction:
The Electricity Act, 2003, recognizes Trading in electricity as a distinct activity and requires any person intending to trade in electricity, to obtain a licence from the Appropriate Commission u/s 14 of the Act. The Appropriate Commission is also required u/s 52 of the Act to specify the technical requirement, capital adequacy requirement, and creditworthiness for being an electricity trader. The electricity traders are also required to discharge such duties in relation to supply and trading in electricity as may be specified by the Appropriate Commission. Accordingly, this Commission published a draft Regulation on the subject in the A.P.Gazette on 21-08-2004 seeking comments/suggestions from interested persons and also issued a press release on the same day apart from hosting the draft Regulation on its website. The Commission has considered the responses received and finalised the Regulation.
In exercise of powers vested under Section 181 read with Section 52 of the Electricity Act 2003 (36 of 2003) and all other powers enabling it in that behalf, the Andhra Pradesh Electricity Regulatory Commission hereby makes the following Regulation specifying the eligibility criteria for grant of intra-State trading licence, the duties of the electricity trader and other related matters:
1. Short
title, extent and commencement
i.
This Regulation
may be called the Andhra Pradesh Electricity Regulatory Commission (Intra-State
Electricity Trading) Regulation, 2005.
ii.
This Regulation
shall be applicable to any person engaged in intra-State trading of
electricity, within the territory of the State of
Provided
that clauses 3,4,5, 6.3, 6.5 and 6.7 of this Regulation shall not be applicable
to distribution licensees including persons mentioned in provisos 3, and 5 to
Section 14 of the Act and the persons granted exemption from the requirement of
obtaining a licence under Section 13 of the Act when they undertake intra-State
trading.
iii.
This Regulation
shall come into force on the date of its publication in the Andhra Pradesh
Gazette.
2. Definitions
and interpretation
i.
In this
Regulation, unless the context otherwise requires:
(a) “Act” means the Electricity Act, 2003 (36 of 2003);
(b) “Agreement” means agreement(s) entered into by the electricity trader with the seller of electricity, buyer of electricity, other licensees etc., that enable(s) the trading transactions;
(c) “Applicant” means a person who has made an application to the Commission for grant of licence for intra-State trading in electricity;
(d) “Commission” means the Andhra Pradesh Electricity Regulatory Commission;
(e) “Conduct of Business Regulations” means the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, as amended from time to time;
(f) “Customer” means any person purchasing electricity from the trader and includes distribution licensee, any other Trader and any consumers;
(g) “Grid Code” means the State Grid Code approved by the Commission under clause (h) of sub-section (1) of Section 86 of the Act or deemed to have been approved under Section 172 (b) of the Act, as the case may be.
(h)
“Intra-State trading” means purchase of electricity and
its resale within the State of
(i)
“Licence” means a licence granted under Section 14 of
the Act to undertake
(j) “Net worth” at any point in time is defined as Paid-up capital (including Share Premium) plus Free Reserves (exclusive of intangible assets and revaluation, if any) minus Deferred Revenue Expenditure.
(k) “Other Business” means any business of the trader other than the licenced business of intra-State trading;
(l) “Quarter” means a three-month period starting from 1st day of April, July, October or January and ending respectively on the last day of June, September, December or March of a financial year;
(m) "State” means the State of
(n) "State Act" means the A.P. Electricity Reform Act, 1998 (No. 30 of 1998).
(o) “Trader” means a person who has been granted a licence under this Regulation for undertaking intra-State trading, and Distribution Licensees including the persons mentioned in provisos 3 and 5 to Section 14 and those granted exemption from the requirement of obtaining the licence under section 13 of the Act when they undertake intra-State trading;
ii. Words and expressions used in this Regulation but not defined, unless the context otherwise requires, shall have the same meaning as assigned to them in the Act.
iii.
This Regulation
shall be read in conjunction with the Conduct of Business Regulations and the
Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions of Open
Access) Regulation, 2005 (No.2 of 2005).
3 Technical requirements to qualify as an Electricity Trader
3.1 The applicant must have at least the following resources:
(1) Experts and skilled staff with relevant qualifications and experience and having knowledge of (a) Power system operations, and (b) Finance and commerce;
(2) Adequate office area with adequate communication facilities like telephone, fax, computer, and internet facilities; and
(3) A website of his own to post all necessary information about his electricity trade.
3.2
The applicant
shall submit along with the application, the following information to the
Commission for assessment of his technical capability with regard to the
resources deployed as outlined in sub-clause 3.1:
(1) number of experts, summary of their educational qualifications and experience in and knowledge of electricity industry/market as well as understanding of the operation of the system and commercial transactions, and number of years of experience of each personnel;
(2) details of key staff, their educational qualifications and business skills; and
(3) details of office and communication facilities and website.
The aforesaid information shall be filed along with the supporting documents.
3.3
The applicant
shall justify to the satisfaction of the Commission that the technical
capability and resources exhibited by the applicant are adequate to manage the
intended volume of intra-State trading.
3.4
The applicant
shall comply with the technical requirements when applying for the licence for
intra-State trading:
Provided that the Commission may grant the intra-State
trading licence to the applicant subject to the trader furnishing the details
and exhibiting compliance to the technical requirements, in accordance with
clauses 3.1 and 3.2 above, before undertaking the intra-State trading.
4 Financial
requirements to qualify as an Electricity Trader
4.2
The financial requirements shall be
complied with before applying for the licence for intra-State trading.
4.3 The net worth requirement of the
electricity trader/applicant at any time shall not be less than the following
amounts:
|
Category of the trading licence |
Annual volume of electricity to be traded |
Net worth requirement (In Rs. Crores) |
|
A |
Up
to 50 MU |
1.00 |
|
B |
Greater
than 50 MU and up to 100 MU |
1.50 |
|
C |
Greater
than 100 MU and up to 200 MU |
3.00 |
|
D |
Greater
than 200 MU and up to 300 MU |
4.50 |
|
E |
Greater
than 300 MU and up to 400 MU |
6.00 |
|
F |
Greater
than 400 MU and up to 500 MU |
7.50 |
|
G |
Greater
than 500 MU |
10.00 |
Provided that the licensee shall
increase his net worth if the volume of trade moves from a
lower category to a higher category and the
change of category shall be decided based
on the volume of electricity traded as on 31st March of each year,
and of which the licensee shall keep the Commission informed of his moving from
one category to the other and subsequent changes in the net worth.
5. Procedure for grant of licence for
intra-State trading
The procedure for grant of licence to an intra-State
electricity trader by the Commission shall be governed by this Regulation read
with the provisions of the Conduct of Business Regulations (CBR) in force. In case of any variations between the two,
the provisions of this Regulation shall prevail insofar as the licencing for
intra-State trading is concerned.
5.1
Application
for Licence
(1) Any person intending to engage in
the business of Trading in electricity in the State of
(2) The
General Conditions subject to which the licence shall be issued are contained
in Appendix 3 to this Regulation and the Licensee shall be bound by such conditions,
except to the extent specifically exempted by the Commission.
(3) The General Conditions specified in Appendix – 3, shall apply to all
applicants for grant of Trading Licence including the deemed Licensees under
provisos third and fifth to Section 14 of the Central Act (4).
(4) The Commission may, in addition to the General
Conditions, decide on the Specific Conditions subject to which licence shall be
issued to the applicant.
(5) Any person intending to apply for a
licence shall duly comply with the conditions and requirements laid down by the
Commission, in this Regulation.
(6) The
application for Licence shall be made in accordance with the provisions of
the Act, the State Act and this Regulation and in the form enclosed as Appendix
-2 to this Regulation and shall be
supported by affidavit of the authorized person.
(7) The
application for Licence shall be accompanied by documents and particulars
required to be provided as per Part-B of
the application form
(Appendix- 2).
(8) The
application for Licence shall specifically contain the deviations, if any, proposed, from the General Conditions of
Licence as contained in Appendix 3 to this Regulation and reasons in support
thereof.
(9) The
Applicant shall duly fulfill the conditions of technical requirement, capital
adequacy requirement and creditworthiness and further shall agree to discharge
such duties as specified in this Regulation.
(10) The application, along with all annexures
and enclosures thereto, shall be submitted to the Commission in hard copy as
well as in electronic form.
5.2 Acknowledgment
of application: On receipt of the application, the Receiving
Officer of the Commission shall note
thereon the date of its receipt and shall send to the applicant an
acknowledgment stating the date of receipt.
5.3 Facilitating public
inspection of documents etc :
(1)
The applicant shall
maintain at his office and at such other place as may be designated by the
Commission, the copies of the application and the documents accompanying the
application, referred to in Appendix 2, for public inspection and furnish to
persons applying for them the copies thereof at a price not exceeding the
normal photocopying charges
(2)
The applicant shall post
complete application along with annexures and enclosures thereto on his
website.
5.4
Calling for additional information:
The Commission or its Secretary or any Officer designated for the purpose by the Commission may, upon scrutiny of the application, require the applicant to furnish, within a specified period, such additional information or particulars or documents as the Commission may consider necessary for the purpose of processing the application.
5.5 Publication
of notice of application:
(1) The applicant shall within 7 days after
making such application, publish a notice of his application along with the
particulars as mentioned in Appendix
1, in at least two English daily newspapers including one financial newspaper
in English and two Telugu newspapers in Telugu having wide circulation within
the State.
(2) The
publication shall be headed by a short title corresponding to that given in the
application and shall give the addresses of the offices at which the
application and the documents accompanying it can be inspected and the copies
of same can be purchased and shall also state that any person, desirous of
making any representation or objections with reference to the said application,
to the grant of licence may do so by letter addressed to the Secretary to the
Commission, with a copy to the applicant, within thirty days from the date of
publication.
(3) The applicant shall endeavour to publish the aforementioned notice in all the newspapers simultaneously, on the same day. In case the notice is published on different days in different newspapers, the date of last published notice will be deemed to be the date of publication of the notice.
(1) Any person intending to object to the grant of the licence
shall file objections with the Secretary to the Commission, with a copy to the
applicant within thirty (30) days from the date of publication of the notice by
the applicant.
(2) The Commission will post all the
objections received in response to the said publication, on its website.
5.7 Applicant’s response to the objections:
The applicant shall file his
comments, if any, to the Commission on the objections or suggestions received
in response to the notice, within 45 days from the date of publication of the
notice. The applicant can also access the objections through Commission’s
website.
5.8 Grant of Licence:
(1) The applicant shall
within 7 days from the date of publication of the notice as aforesaid submit to
the Commission, on affidavit, the details of the notice published along with
the copies of the newspapers in which the notice is published.
(2) After the applicant has published of the notice of the application and after considering the objections received, if any, the Commission may decide, provisionally, to grant or refuse the licence and if it decides to grant the licence it may do so on such specific terms and conditions and with such modifications to the general conditions as the Commission may decide.
(3) When the Commission decides to grant the Licence, the Commission shall publish notice informing the name and address of the person to whom it intends to grant the Licence and other details as considered necessary and seek suggestions/objections from public and also indicate a date for hearing those who desire to be heard in person.
(4) After considering all
suggestions/objections and after hearing those desiring to be heard in person,
the Commission may finally decide either to grant or refuse the Licence.
(5) If
the Commission grants the Licence, the Secretary of the Commission shall
immediately after issue of a licence, forward a copy of the licence to the
State Government, Central Electricity Authority, Central Electricity Regulatory
Commission, and to such other persons as the Commission considers necessary.
5.9
Refusal of Licence:
If the Commission is not
inclined to grant the Licence, the Commission shall give an opportunity to the
Applicant for being heard in person before rejecting the application.
5.10 Date of commencement of licence: The licence shall commence from the date the Commission may direct as
the date of commencement of Licence.
5.11 Revocation of a Licence:
(1) The proceedings for revocation of a
Licence and/or for issuing any other orders under section 19 of the Act and /or
Section 18 of the State Act shall be initiated by the Commission by means of an
order. The Commission may initiate such
proceedings suo-motu or on application of the licensee or on receiving any
complaint or information from any person.
(2) The Commission shall give notice of the
proceedings for the revocation of the licence to the licensee and to such other
person, authority or body as the Commission may consider appropriate.
(3) Subject to the provisions of the Act and
the State Act, and the procedure prescribed therein, the inquiry by the
Commission for revocation of the licence, in sofar as it is applicable, shall
be in the same manner as provided in the Conduct of Business Regulations in
force.
(4) If
the Commission decides to revoke the licence, the Commission shall communicate
the order of revocation to the licensee stating the date from which such
revocation shall take effect.
(5) The Commission may instead of revoking
the licence pass any other order imposing such terms or conditions subject to
which the Licensee is permitted to operate thereafter.
5.12 Amendment of the licence:
(1) The application for amendment to the
terms or conditions of the licence may be made by the Licensee in the form of a
petition as provided for in the Conduct of Business Regulations in force, duly
accompanied by a statement of the proposed amendments and the applicable fee.
(2) The applicant shall, within seven days
from the date of the application for amendment, publish a notice giving a brief
statement of the amendment(s) proposed, the reason for the proposed
amendment(s), the effect of the amendment(s) proposed on the discharge of the
functions of the Licensee under the Licence granted, the alternate arrangement,
if any, proposed for discharge of such functions and such other particulars as
the Commission may direct.
(3)
The publication under sub-clause (2)
above shall give the addresses of the offices at which the application for
amendments can be inspected and the copies of documents can be purchased and
shall state that every local authority, utility or person, desirous of
making any representation with reference to application to the Commission,
may do so by letter addressed to the Secretary to the Commission within
thirty days from the date of publication.
(4)
In the event the Commission
proposes to amend the terms or conditions of the Licence granted to a licensee,
suo motu, the Commission shall publish a notice of the proposed amendment(s)
giving a brief statement of the amendment (s) proposed, the reason for the
proposed amendment (s), the effect of the amendment (s) proposed on the
discharge of the functions of the Licensee under the Licence granted, the
alternate arrangement, if any, proposed for discharge of such functions and
such other particulars as the Commission may consider appropriate.
(5) Unless otherwise decided in writing by the Commission, the procedure specified in this Regulation for grant of licence, insofar as it can be applied, shall be followed while dealing with an application for amendment of the licence.
6. Duties and obligations of an Electricity Trader
6.1 Duties relating to trading transactions
(1)
The trader shall have in
place all agreements for the purchase and sale of electricity, and any
necessary related authorisations and arrangements as required for the discharge
of his obligations under the Licence. Necessary safeguards with regard to
supply of electricity through trading, or payment for electricity traded shall
be included in the agreements between the parties.
(2)
The trader shall have in
place the open access agreements with each transmission licensee and
distribution licensee concerned for the conveyance of electricity, unless the
trader’s customer or power supplier has entered into such access agreements.
(3) Such agreements shall inter-alia provide that the energy exchanges, billing and payment shall be as per the Billing and Settlement Code to be approved by the Commission under Regulation No.2 of 2005 referred to in clause 2 (iii) above.
(4) The trader shall have in place a well-structured payment security mechanism, i.e., through letters of credit or any other superior instrument mutually acceptable to the parties concerned.
(5) The trader shall maintain an up-to-date register or record of his customers and all the business transactions.
6.2 Duties relating to supply to consumers
(1) The
trader shall be responsible to the Commission, the consumers and others concerned in the matter of supply of
electricity to his consumers notwithstanding the default of Distribution
Licensee, if any.
(2) The trader shall always keep in his office adequate number of
copies of the updated Electricity Supply Code and the Terms and Conditions of
Supply and shall, on demand, sell such copies to any applicant at a price not
exceeding the normal photocopying charges.
6.3 Technical resources, Capital adequacy and Creditworthiness
(1) The trader shall maintain the technical resources specified in clause 3 and provide to the Commission the details of any changes justifying that the capability is, and continues to remain, adequate to cater to the volume of his trade.
(2) If the trading volume of the trader exceeds the specified volume of trade in any financial year then the trader shall immediately the Commission of his moving to the higher category and increase his net worth to the applicable level as specified in clause 4.3 and pay the balance license fee prorated for the rest of the year by the following 30th April.
(3) In case of non-reporting of such an event, the Commission may levy penalty on the trader in terms of Section 142 of the Act, in addition to levy of late payment surcharge / interest for non-payment / delayed payment of the additional licence fee due from the Trader as per sub-clause (2) above, in the manner and at the rate specified in clause 6.5(2), apart from suspension of his licence.
The trader shall make reasonable endeavours to maintain investment grade credit rating (obtained from a leading independent Credit Rating Agency) for all debts throughout the period they remain on the books of the trader:
6.4 Compliances and information submission
(1) At the end of every quarter, the trader shall provide information to the Commission in such form and manner as may be directed by the Commission from time to time to demonstrate that he has complied with the net worth criteria mentioned in clause 4.3 of this Regulation.
(2) The trader shall comply with Regulations, codes, orders and directives such as Regulations on phasing of open access in electricity distribution, standards of performance, supply code, billing code, and balancing and settlement code, etc.
(3) The trader shall furnish to the Commission such information as may be required to monitor the trader’s performance, compliance with the terms and conditions of the licence and any other legislative or regulatory requirement.
(4) The trader shall comply with any direction issued by the Sate Load Dispatch Centre (SLDC).
(5) The trader shall provide data and his business plan to the Commission, the State Transmission Utility and the SLDC, annually, as well as on request.
(6) The trading margin, if any, fixed by the Commission under Section 86 (1) (j) of the Act for the intra-State trading shall be applicable to the trader.
(7) To enable the Commission to determine the trading margin, the trader shall file the details in such form and in such manner as may be required by the Commission from time to time.
(8) The trader shall as soon as practicable report to the Commission: (a) any significant changes in his circumstances which may affect the trader’s ability to meet his obligations under the Act, the State Act, rules and regulations directions/orders issued by the Commission, the Grid Code, agreements or the licence; (b) any material breach of the provisions of the Act, the State Act, rules and the regulations, directives/orders issued by the Commission, the Grid Code, agreement or the licence; and (c) any major change in shareholding pattern, ownership or management of the trader.
6.5 Payment of Annual Licence Fee
(1)
The trader shall pay to
the Commission the following non-refundable annual (April to March) licence fee by means of a demand draft/pay
order drawn on
|
Category of the
Trading License |
Annual volume of
electricity to be traded |
Annual Licence Fee |
|
A |
Up to 50 MU |
Rs. 50,000 |
|
B |
Greater than 50 MU and up to 100 MU |
Rs. 75,000 |
|
C |
Greater than 100 MU and up to 200 MU |
Rs. 1.00 Lakh |
|
D |
Greater than 200 MU and up to 300 MU |
Rs. 1.50 Lakhs |
|
E |
Greater than 300 MU and up to 400 MU |
Rs. 2.00 Lakhs |
|
F |
Greater than 400 MU and up to 500 MU |