MoP allows trading of electricity derivatives and forward contracts

The Ministry of Power (MoP) has approved trading of electricity through forward and derivative contracts, subject to the outcome of a case in the Supreme Court.

Reportedly, an order to this effect has been issued by the power ministry on July 10 after consultation with the Solicitor General. The development is indicative of a resolution of a decade old jurisdictional conflict between Central Electricity Regulatory Commission (CERC) and the Securities and Exchange Board of India (SEBI). The SEBI is expected to oversee the functioning of all financially traded electricity forwards while the CERC would regulate physically settled forward where electricity is delivered on future date at the contracted price. The Supreme Court is expected to hear the matter on August 28, 2020.

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