Petition No. 101/MP/2011. Case: In re : Power Exchange of India Ltd. Vs. Central Electricity Regulatory Commission
| Case Number | Petition No. 101/MP/2011 |
| Judges | Dr. Pramod Deo, Chairperson, Shri S. Jayaraman, Member, Shri V.S. Verma, Member and Shri M. Deena Dayalan, Member |
| Issue | Electricity Law |
| Judgement Date | October 27, 2011 |
| Court | Central Electricity Regulatory Commission |
Order:
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Regulation 18 (i) of Central Electricity Regulatory Commission (Power Market) Regulations, 2010 (hereinafter "Power market Regulations") provides as under:
18 (i) A Power Exchange shall always have a minimum net worth of Rs.25 Crore Provided that the Power Exchange shall always maintain the above net worth and in case the same depletes due to payment made by the Power Exchange to sellers/ buyers in default including by the usage of the SGF impacting its net worth, the Power Exchange shall increase its net worth to comply with the above net worth criteria within 3 months from the date of depletion.
Provided that if and when a Power Exchange separates its clearing function to a Clearing Corporation, it shall be required to have a minimum net worth of Rs.5 Crore.
Provided further that the Commission may, by general order, review the net worth criteria from time to time.
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The petitioner had previously filed Petition No. 134 of 2010 seeking extension of time to raise additional equity share capital to achieve the prescribed net-worth. The Commission vide its order dated 25.5.2010 had allowed PXIL a period of one year from the date of notification of Power Market Regulations i.e. till 20.1.2011 to achieve the prescribed net-worth criteria. The Petitioner filed the present petition on 5.4.2011 praying for additional time of 3 years to achieve the specified net-worth. The petitioner has submitted that in compliance with the order of the commission dated 25.5.2010, it had initiated the following steps:
(a) After approval by the Board of the company in its meetings held on 26.5.2010, 24.9.2010 and 15.12.2010, the petitioner has:
i. made additional equity offer on preferential basis to National Stock Exchange of India Ltd, National Commodity & Derivatives Exchange Ltd and Power Finance Corporation Ltd.
ii. increased the Authorized share capital of the company which was subsequently approved by the Shareholders of the company at the 2nd AGM of the Petitioner held on 24.9.2010.
iii. decided to offer equity shares on preferential basis to existing and other strategic investors.
iv. allotted equity shares to National Commodity & Derivatives Exchange Ltd and MP Power Trading Company Ltd. v. decided to offer equity shares to a strategic investor at a premium. Though the petitioner was in negotiations with investors to offer and issue equity at a price, the transactions could not be finalized due to regulatory uncertainties relating to ownership pattern of Exchanges.
vi. allotted equity shares to National Stock Exchange of India Ltd. and extended further time to one of the PSU shareholders to subscribe additional equity shares in the petitioner as the said shareholder is in the process of getting presidential approval for the equity infusion. It also states that the process is lengthy and time taking in case of PSUs and state owned utilities.
(b) The Petitioner has taken significant steps to achieve the net worth requirement which is evident from the fact that the paid up capital of the Exchange has increased from Rs 34.34 crores in March 2010 to Rs 40 crores in March 2011 after the Commission's order.
(c) The Petitioner is in the process of launching new products such as Intra Day, Any Day, Monthly Products and Energy Efficient Certificates etc. in the near future which will help petitioner to achieve the net worth.
(d) The Petitioner has taken significant steps to promote Renewable Energy Certificates (REC) and spent significant time & energy as well as money in the development of this platform.
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The Petitioner has elucidated the following reasons which are not attributable to the petitioner, but have contributed to the Petitioner's inability to achieve net worth criteria.
(a) Regulatory Uncertainty - The petitioner could not launch 'Month Ahead Contract' despite Commission's approval due to litigation at Hon'ble Mumbai High Court on the Electricity jurisdictional issue. Due to ambiguity in the market, the petitioner's business is severely impacted and hence is unable to meet the prescribed net worth.
(b) Loss caused due to Congestion in Transmission Corridor- Transmission Corridor congestion has increased leading to significant loss of business owing to matched volumes being less than scheduled volumes. The impact of congestion was severely felt in...
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