Power Exchange Operations

1
Power Exchange Operations

• S.C. Saxena
• National Load Despatch Center

2
Presentation Outline

• Review of Fundamentals
• Power Exchanges
• Concepts
• Implementation in India
• Regulatory Framework
• Procedures for Collective Transactions
• Congestion Management
• Market Splitting
• Sharing of Available Margins amongst the Power
  Exchanges
• Experience Gained in India
• Trading of Renewable Energy Certificates in the
  Power Exchanges
• Taking the Markets to the Next Level
• Proposal For Evening Market
• Sub-Hourly (15 Minute) Market in Power Exchange
• Recent International Experience

3
Review of Fundamentals
4
Market

• A mechanism through which buyers and sellers
  interact to determine prices and exchange goods
  and services
• Entire set of conditions surrounding production,
  transport and distribution of a product
• Size determined by geography, transport, costs,
  etc.

5
In a market everything has a price !!!

• Price
• is the value (not cost) of the good/service in
  terms of money
• represents the terms on which voluntary exchange
  of goods services takes place
• Serves as signal to the producers and consumers

6
Demand

• Need Purchasing power Demand
• Law of downwardsloping demand
• When price of a commodity is raised, buyers tend
  to buy less of the commodity, other things
  remaining constant (e.g., purchasing power,
  related goods, preferences, environment, etc.)

7
Supply Curve

• The supply curve shows the relationship between
  its price and the amount of that commodity that
  producers are willing to produce and sell, other
  things held constant (e.g., cost of production,
  technological advancement, related goods, etc.)

8
Equilibrium

• Quantity demanded is equal to quantity supplied !

9
Shift in equilibrium
10
Price elasticity of demand
Change in Quantity Demanded in response to change
in Price
More Elastic
Elastic
Perfectly Inelastic
Less elastic
Perfectly elastic
11
Power Exchanges Concepts
12
Bilateral (OTC) Markets

• Common price through a co-operative approach
• Major Concerns
• Price Discovery
• Price Discrimination
• Liquidity
• Transaction Costs

13
Power Exchanges - Definition

• An electricity Power Exchange provides a spot
  market, mainly day-ahead, for electricity, which
  like any other market matches demand and supply
  for each time block, while providing a public
  price index

14
Power Exchange Characteristics (1)

• A Market Place
• Voluntary or Mandatory
• Anonymous auction platform
• Neutral
• Liquidity
• A competitive wholesale spot trading arrangement
• Energy Only Markets
• Do not account for any technical constraints or
  capacity payments
• Bids
• Sale Bid Quantum and Minimum price
• Buy Bid Quantum and Maximum price

15
Power Exchange Characteristics (2)

• Price Discovery
• Common price achieved through non co-operative
  approach
• Price Discovery by matching of demand-supply
• Price signals
• Benchmark reference price
• Congestion Management
• Implicit Auction
• Market Splitting

16
Power Exchange Characteristics (3)

• Standardized specifications
• Contract structure
• Robust Clearing Settlement systems
• Counter party credit risk absorbed
• Risk Management
• Payment Security
• Standard margining system
• Eliminates credit rating
• Fair, Safe, orderly market
• Rigorous financial standards and surveillance
  procedures

17
Bilateral (OTC) Contract vs. Power Exchange
OTC contract Exchange Traded
Available to limited market participants Liquid market wider market participation
Bilateral/ Customized Contracts Standardized contracts
Counter party credit risk Counter party risk assumed by exchange
Is an involved participant Platform is Neutral
Opaque dealing Transparent price discovery mechanism
Bilateral dispute settlement mechanism Well defined dispute settlement mechanism
Difficulty in reporting and regulating various trades The exchange is the central reporting and regulating entity
18
Interplay PX Bilateral Markets (OTC)

• Rivals
• Competition between two types of markets
• Complementary
• Competition limited to day-ahead
• Preference to OTC in longer time frame
• Inter-dependent
• Prices on the PX OTC must be very close else
  arbitrage occurs
• Hedging

19
The PX Clearing House

• Subordinate to the PX
• Intermediary for transactions
• Tracks all transactions
• Primary role
• Guarantee financial reliability to the
  participants
• Participants required to maintain margin accounts
• Effectively hedges against credit risk

20
Advantages PX

• Promotes trade and competition
• Reliable price discovery
• Reference for bilateral contracts
• PX recognizes value of the commodity
  (electricity)
• Does not guarantee lower prices
• Optimal utilization of sparse resources
• Generation
• Transmission
• Credit risks covered by the PX
• Congestion Management
• Facilitates trading of short term arising on
  account of uncertainty in demand forecasting

21
Auction Models
MCP
22
Social Welfare Maximization
Accepted Purchase Bids (gt MCP) (Consumers
Discount)
Accepted Sale Bids (lt MCP) (Generators Surplus)
23
Price Calculation Algorithm -Day ahead Hourly
Bids
PRICE-paise/kWh 0 100 200 230 250 270 300 400 500 600 700
PARTY A-ZONE-1 600 600 600 400 400 400 400 200 150 100 100
PARTY B-ZONE-1 600 600 400 400 300 200 0 0 -50 -100 -200
PARTY C-ZONE-2 0 -100 -100 -100 -200 -300 -400 -500 -500 -500 -500
PARTY D-ZONE-2 0 0 -200 -300 -300 -300 -400 -500 -500 -500 -600
SUM, PURCHASE 1200 1200 1000 800 700 600 400 200 150 100 100
SUM, SALES 0 -100 -300 -400 -500 -600 -800 -1000 -1050 -1100 -1300
NET TRANSACTION 1200 1100 700 400 200 0 -400 -800 -900 -1000 -1200
AGGREGATED SALE BIDS
AGGREGATED PURCHASE BIDS
Market Clearing Price (MCP) 270 p Market
Clearing Volume (MCV) 600MW
24
Types of Bids

• Single bids
• Price Quantity pairs, one for each hour
• Block Bids
• A Block bid is all or none type of a bid i.e. bid
  will get accepted by the system only if price and
  volume condition is getting satisfied.
• Can cause unpredictable movements of prices and
  volumes

25
Power Exchange Implementation in India
26
The Milestones

• July 2006
• Staff Paper by CERC
• February 2007
• CERC Guidelines for establishment of Power
  Exchange
• August 2007
• In principle approval to the first power exchange
  in the country
• January 2008
• Revised Regulations for Open Access in
  Inter-state Transmission, Effective 1st April
  2008
• June 2008
• Procedure for Scheduling of Collective
  Transactions by CTU
• Commencement of operations
• October 2008
• Second Exchange begins operations

27
Power Exchange in India Salient Features

• Multiple Power Exchanges
• Competition amongst Exchanges
• Voluntary participation
• Double sided bidding
• Uniform pricing
• Day-ahead exchange
• Hourly bids
• Congestion management by market splitting

28
Regulatory Framework
29
Regulators Approach

• CERC Guidelines for setting up of a Power
  Exchange
• The general approach of the Commission is to
  allow operational freedom to the PX within an
  overall framework. The regulation would be
  minimal and restricted to requirements essential
  for preventing derailment/accidents and
  collusion. Private entrepreneurship would be
  allowed to play its role. The Commission shall
  keep away from governance of PX, which would be
  required to add value and provide quality service
  to the customers

30
CERC Power Market Regulations, 2010 (1)

• Scope Extent
• OTC Markets
• Power Exchange Market
• Other Power Exchange Markets
• Derivatives
• Types of Contracts
• Delivery based OTC Contracts
• Financially settled electricity derivatives
  contracts transacted in OTC market
• Delivery based contracts transacted on Exchange
• REC Contracts
• Capacity, Ancillary, Derivative based contracts
  (future)

31
CERC Power Market Regulations, 2010 (2)

• Prior to grant of permission to Power Exchange,
  CERC may examine
• Type of contract (day ahead, term ahead etc)
• Price Discovery methodology and matching rules
  proposed
• Transaction period When transaction shall
  commence and for what tenure transaction session
  shall continue before delivery commences
• Risk Management mechanism
• Margining mechanism
• Final Price Settlement mechanism
• Delivery mechanism, delivery duration

32
CERC Power Market Regulations, 2010 (3)

• Objectives of the Power Exchange (Regulation 10)
• Ensure fair, neutral, efficient and robust price
  discovery
• Provide extensive and quick price dissemination
• Design standardised contracts and work towards
  increasing liquidity in such contracts
• Explanation Liquidity is a measure of ease of
  entering or exiting into a transaction (generally
  large transaction) with minimal impact in the
  market price of the transacted contract.

33
CERC Power Market Regulations, 2010 (4)

• Principles of Price Discovery (Regulation 11)
• The economic principle of social welfare
  maximisation and to create buyer and seller
  surplus simultaneously during price discovery.
• The bidding mechanism shall be double sided
  closed bid auction on a day ahead basis.
• The price discovered for the unconstrained market
  shall be a uniform market clearing price for all
  buyers and sellers who are cleared
• In case of congestion in transmission corridor,
  market splitting mechanism shall be adopted.
• The delivery / drawl of power shall be considered
  at the regional periphery.

34
CERC Power Market Regulations, 2010 (5)

• Other Provisions
• Prudential Norms
• Governance Issues
• Ownership Patterns
• Registration Fees
• Membership
• Clearing House
• Interface with System Operator

35
Open Access Regulations, 2008

• Earlier Regulations notified in February 2004
  (amended in 2005) stand repealed
• Covers Short Term Open Access Transactions only
• Categories of Transactions
• Bilateral
• Collective Transactions discovered on a Power
  Exchange
• Nodal Agency
• Bilateral RLDCs
• Collective NLDC

36
Open Access Regulations, 2008 Provisions For
Collective Transactions

• Transmission Charges
• Shift from Contract Path to Point of
  Connection
• Both buyers and sellers to pay
• IR Links no separate treatment
• Transmission Losses
• Applicable on both buyers and sellers
• Disbursement of Transmission Charges
• 25 retained by CTU
• 75 to be credited to long-term customers

37
Open Access Regulations, 2008 Provisions For
Collective Transactions

• Thrust on Empowerment of SLDCs
• SLDC Concurrence Clause 8(2)
• NOC/Standing Clearance to be obtained by State
  Utilities/Intra-State Entities from the SLDC for
  trading through PX
• SLDC to respond within 3 days
• SLDCs may charge appropriate fee for such
  NOC/Standing Clearance (as per SERC or Rs. 5000
  if not notified by SERC)

38
Procedures for Scheduling of Collective
Transactions
39
Eligibility Conditions

• Entities scheduled by RLDCs
• Deemed Regional Entity
• Entities whose metering and energy accounting
  done by RLDCs
• Entities scheduled by SLDCs
• SLDCs to assess TTC/ATC for their State system
• Prior Consent from respective SLDCs
• Standing Clearance / NOC
• New Entities
• To Satisfy conditions as laid down in IEGC
• Obtain Prior Approval from RLDCs/SLDCs as per
  jurisdiction

40
Commercial Conditions (1)

• Charges for Collective Transactions payable to
  SLDCs
• Transmission Charges As per SERC, if notified or
  else Rs. 80/MWh
• Operating Charges Rs. 2,000 per day for each
  point of transaction
• Each point of injection and drawl to be counted
  separately by SLDCs
• PX to settle SLDC charges directly with
  respective SLDC

41
Commercial Conditions (2)

• Charges for Collective Transactions payable to
  NLDC
• Application Fee
• _at_ Rs. 5,000/-, payable by PX to NLDC at the time
  of application
• Transmission Charges
• Applicable for each point of injection and drawl
• Charges for use of ISTS _at_ Rs. 100 per MWh
• Operating Charges
• _at_ Rs. 5,000/- per day per group involved
• Buyers and Sellers in a State to be clubbed into
  separate groups
• Each group to be counted as a single entity by
  NLDC
• Payment by PX to NLDC
• Transmission and Operating Charges By next
  working day
• Preferred Mode Electronic Fund Transfer

42
Treatment Of Losses

• Average transmission losses of the respective
  region to be applied, both on Buyers and Sellers
• Sellers to inject extra power (MW) in addition to
  contracted power (Contracted Power Losses)
• Buyers to draw less power (MW) than contracted
  power (Contracted Power Losses)
• Applicable losses to be declared in advance
• Intra-State losses to be taken care of by the
  respective SLDCs
• Additional losses for wheeling, if necessary
• To be notified in advance by NLDC
• Applicable only for Injection

43
Real Time Congestion Management

• Curtailment
• By RLDCs at the periphery of Regional Entities
• SLDCs to further incorporate this curtailment
  for State Utilities/Intra-State Entities
• Settlement
• Transmission Charges Pro-rata refund by NLDC to
  PX
• Operating Charges Not to be revised
• Direct settlement between PX and its participants

44
Information Exchange
Power Exchange
Constraints, if any
Acceptance by NLDC
Information exchanged over leased line between
NLDC and PX
Request for Scheduling
Provisional Solution
N L D C
Over WAN
Trades
Schedules
RLDCs
Over Internet (RLDC Website)
Schedules
SLDCs
Final Trade Results for State Utilities Intra
State Entities to be sent by PX directly to SLDCs
45
Congestion Management
46
Demarcation into Bid Areas
Area Region States
N1 North JK, HP, CHD, PUN, HAR
N2 North RAJ,DEL, UP, UTT
W1 West MP, CHTG
W2 West MAH,GUJ, GOA, DD,DNH
S1 South AP, KAR, GOA
S2 South TN, KER, PONDY
E1 East WB, SIK, BIH, JHAR
E2 East ORISSA
A1 North-East TRIP, MEGH, MANI, MIZO
A2 North-East AS, AP, NAGA
47
SKEWED LOAD GENERATION BALANCE

• Scenarios
• 4D
• 3D 1S
• 2D 2S
• 1D 3S (Congestion)
• 4S

48
Congestion Management - Market Splitting
Cost of Congestion 2000
49
Transmission Congestion Management Methods

• Pricing Based
• Explicit Auction
• Implicit Auction
• Market Splitting
• Remedial
• Counter Trade
• Re-dispatching

50
Congestion Management in Multi Exchange Scenario
(1)

• ISSUE
• Sharing of available margins
• Possible Methods
• Priority Based Rules
• Explicit Auction
• Merging of Bids
• Priority Based Rules
• Lowest MCP
• Highest MCV
• Highest MCP X MCV
• Maximization of Social Welfare, consumer surplus,
  etc.
• May not lead to an overall economy

51
Congestion Management in Multi Exchanges Scenario
(2)

• Explicit Auctioning amongst Exchanges
• Inter-dependencies in the Indian scenario
• Difficult to implement
• Merging of bids obtained by each Power Exchange
• Equivalent to system operator interfacing with
  only one Exchange
• Confidentiality issues
• Pro rata rationing of available margins
• Simple to implement
• Sub-optimal method
• Possibility of over-estimation of capacity
• Further complications
• Arising out of inter-dependencies in the Indian
  scenario

52
Implementation in India

• Worldwide, one Power Exchange dealing with
  physical delivery in one market
• Pro-rata sharing of available margins
• Applied on cleared trade volumes on each area and
  each corridor
• Interim arrangement
• Debate on for a more optimal method

53
Discovery of Multiple Prices Interplay

• Prices discovered in Power Exchange
• Reflection of anticipated UI price for the next
  day
• Multiple Prices
• Collective Transactions
• Two prices one for each exchange
• Two Grids two UI Prices
• In case of congestion, market split
• Area prices
• Multiple exchanges

54
Case Study

• No congestion till onset of severe winter
• Occasional congestion after 12th Dec 08
• Foggy conditions in Talcher area
• Case of 12th Dec 2008
• Period of Congestion 0500 0600 Hrs
• Congested Corridor Total import to SR
• TTC to SR reduced from 4000 MW to 3600 MW
• Total provisional requisition 1430 MW
• Total trades cleared 1091 MW
• Market split into NEW Grid and SR Grid
• MCP IEX website
• NEW Grid Rs. 4.80 per kWh
• SR Grid Rs. 6.00 per kWh
• Cost of Transmission discovered
• Rs. 1.20 per kWh

55
Experience Gained
56
Monthly Energy Traded through Power Exchanges
Data Up to April 2011
57
Daily Energy Traded through Power Exchanges
Data Up to April 2011
58
(No Transcript)
59
Correlation Prices Shortage/ Surplus
Data June-08 to Apr-11 IEX
60
Distribution of Prices in Power Exchange (IEX)
61
Distribution of Shortage / Surplus (IEX)
62
CASE OF MCV INCREASE AFTER CONGESTION

• Day ahead Market saw increase in Cleared Volume
  after congestion is declared in particular time
  blocks due to
• Block bids
• New Sell/Buy bid getting cleared in Final
  iteration

SOURCEIEX Website
63
Segments in the Short Term Market
64
Volumes in the Short Term Electricity Market
Source MMC, CERC
65
Renewable Energy Certificates (REC)
66
Dealing in Renewable Energy Certificates (1)

• Provisions in the CERC REC Regulations, 2010
• Regulation 8.1
• Unless otherwise specifically permitted by the
  Commission by order, the Certificates shall be
  dealt only through the Power Exchange and not in
  any other manner.
• Regulation 8.2
• The Certificate issued to eligible entity by the
  Central Agency may be placed for dealing in any
  of the Power Exchanges as the Certificate holder
  may consider appropriate, and such Certificate
  shall be available for dealing in accordance with
  the rules and byelaws of such Power Exchange.
• Provided that the Power Exchanges shall obtain
  prior approval of the Commission on the rules
  and byelaws including the mechanism for
  discovery of price of the Certificates in the
  Power Exchange.

67
Dealing in Renewable Energy Certificates (2)

• Statement 3.7.2 of the SOR on Dealing in the
  Certificates states that
• The Commission has noted the observations and
  would like to reiterate that provision in the
  Regulation that REC shall be dealt only in the
  Power Exchange is adequate and also legally
  sustainable. The nature of operation of Power
  Exchange (which essentially is a platform where
  buyers and sellers buy and sell at the price
  discovered by matching aggregate demand and
  supply) is conducive to the development of the
  new and emerging concept of REC. The Commission
  is well within its jurisdiction under Section 66
  of the Act to provide for the specific manner in
  which this new concept should be evolved. In any
  case this mechanism does not debar the traders
  from facilitating transactions in REC as Members
  of the Power Exchanges. The final regulations
  provide that the bye-laws of power exchange to be
  approved by the Commission should include price
  discovery mechanism.

68
Pricing of Renewable Energy Certificates (1)

• Provisions in the CERC REC Regulations, 2010
  Regulation 9.1
• The price of Certificate shall be as discovered
  in the Power Exchange. Provided that the
  Commission may, in consultation with the Central
  Agency and Forum of Regulators from time to time
  provide for the floor price and forbearance price
  separately for solar and non-solar Certificates.
  

CERC determined Floor price and Forbearance price
for dealing in Certificates, which shall remain
valid up to FY 2012.
Non Solar REC (Rs/MWh) Solar REC (Rs/MWh)
Forbearance Price 3,900 17,000
Floor Price 1,500 12,000
68
69
Pricing of Renewable Energy Certificates (2)

• Statement 3.8.2 of the SOR on Pricing of
  Certificates states that
• The Commission has noted the observations.
  As regards the need for forbearance price, the
  Commission would like to emphasize that
  forbearance price is necessary to avoid price
  volatility which may defeat the very purpose of
  facilitating the RPO compliance by utilities
  through REC mechanism. The Commission has,
  however, acceded to the suggestion of providing
  for minimum price for REC along with forbearance
  price, to ensure the threshold level of revenue
  certainty. This is considered necessary to
  instill confidence in the investors towards REC
  mechanism. The Commission has also agreed to the
  suggestion of providing for broad guiding
  principles which the Commission would bear in
  mind while determining the forbearance
  price.Suitable modifications have accordingly
  been made in the draft regulations.

70
Trade Redemption (1)

• Price Discovery in Power Exchanges
• Double sided auction
• Closed auction to start with, provision of
  continuous trade
• Uniform price, with provision for pay-as-bid in
  future
• Market lot 1 REC
• Trading Sessions
• Monthly for the first year, frequency may be
  increased depending on liquidity
• Non-Solar and Solar RECs
• Last Wednesday of every month
• Timing 1 PM to 3 PM

71
Trade Redemption (2)

• Provisional Results
• By 330 PM from both PX to NLDC
• Max bid volumes, seller wise, to be sent to NLDC
  for checking
• Post Trade Check
• Sellers to limit total sell in both the PXs to
  the total RECs held by the concerned RE Generator
  such that the total cleared volume is less than
  total RECs held
• Checking by NLDC
• For total quantum of bids in both the PXs taken
  together
• NLDC to revert back by 4 PM.

72
Trade Redemption (3)

• Default by Sellers
• In case of default by any Seller(s) in terms of
  volume, bids of the defaulter(s) to be rejected
  in both the PXs and auction to be run by both PXs
  excluding the defaulter(s) bids.
• Defaulter can bid in the subsequent auction next
  month onwards. In case of three defaults in a
  year, report to CERC.
• Final Results
• By 5 PM from PX to CA
• Checking and Extinguish
• By the Central Agency by 6 PM

73
Schematic Description of Procedure for Redemption
Fully Automated Flow of Information Paperless
Working
74
Snapshot REC Inventory (www.recregistryindia.in)
75
Information Dissemination

• Central Agency Website www.recregistryindia.in
• List of Registered REC Holders
• Total quantum valid RECs as on date, trend for
  the past
• Trade Results
• MCP and MCV on Power Exchange Websites
• www.iexindia.com
• www.powerexindia.com
• List of REC Buyers, obligated entities
• PX to give monthly report to CERC/CA
• List of seller defaulters
• PX Website / CA Website

76
Moving to the Next Level Some Issues under
Discussion
77
Market Snapshot 27th June 2010 (source IEX)
78
Missed Opportunity
Due to Congestion
Unmatched Volume
8/9/2014
POSOCO
78
79
Potential Volume for Evening Market
8/9/2014
POSOCO
79
80
Corridor Utilization
IEX Website
8/9/2014
POSOCO
80
81
Prevailing Scenario

• Shortages
• Round the clock and in all regions
• In many hours
• Sale bids gtgt Purchase bids 
• Volume lost due to price mismatch is substantial
• Congestion
• During some hours
• Only couple of corridors facing mild congestion
• Margins available on other corridors
• Market split by very low price difference !!
• Need for an Evening Market in the Power Exchanges

8/9/2014
POSOCO
81
82
Advantages of the Proposed Evening Market

• Consumers
• More choice and satisfaction
• Sellers
• Another opportunity
• Further optimization of the portfolio
• Take a more informed position in the market
• Better utilization of uncongested and
  under-utilized corridors
• More economy and efficiency
• Social welfare maximization
• Change in strategy and an overall improvement
• Likely that more volume is cleared
• Movement to the next level

8/9/2014
POSOCO
82
83
Fluctuations in Wind Generation
MW
Tamil Nadu Aug 2010
DATE
TIME
84
Sharp Price Movements (Aug 10)
8/9/2014
POSOCO
84
85
15 Minute bidding in PX (1)

• USP of the Indian Market Structure
• 15 Minute Scheduling
• 15 Minute Metering
• 15 Minute Accounting
• Ramping Rate
• Hour boundary high ramp rate (1000 MW)
• Large Changes in HVDC set points (NEW SR) in
  operation
• 15 minute bidding
• facilitate gradual ramping up and down
• provide operational ease to the participants
• Better portfolio management
• Better management of imbalances
• Deviations from the schedule

NLDC
85
86
15 Minute bidding in PX (2)

• Encourage participation by the Renewable Energy
  Sources
• Australian Market has adopted 5 minute interval
  for facilitation of renewable energy sources
• Prices discovered in PX and UI Prices
• Hourly prices on the Power Exchanges
• UI Prices are on a 15 minute interval
• Introduction of 15 minute bidding would make the
  two comparable
• Both the Morning and the Evening Markets should
  have 15 minute bidding interval

NLDC
86
87
International Experience
88
CIGRE 2010 Study Committee C5 on Electricity
Markets

• Preferential Subject 1
• Challenges of national or state regulations of
  transmission and system operators in regional
  markets, L. A. Dale
• 8 Papers
• Preferential Subject 2
• Impact of intermittent Resources or Demand
  Response on Market Designs Andrew L. Ott
• 10 Papers
• Preferential Subject 3
• Interactions of environmental incentives and
  markets (e.g. carbon) with electricity markets,
  Charles F. Zimmermann
• 4 Papers

89
C5-101 Experience of Indias first
powerexchange and challenges ahead

• Outline of Electricity trading in India
• Features of Power Exchange
• Members and clients
• Delivery and interface with system operator
• Block bids
• Operational experience
• Participation level
• Price trend and volatility
• Issues and challenges
• Propensity to over draw rather than schedule
  power
• Last priority to power exchanges in transmission
  capacity allocation
• Price cap on day-ahead transaction

90
C5-102 Harmonization of cross border
transmission capacity allocation within the
Central West Europe region

• Presentation of CWE Region (Belgium, France,
  Netherlands, Luxembourg and Germany)
• harmonisation of the rules for allocating the
  transmission capacity within CWE
• The establishment of the Joint Auction Office
  (JAO)
• The scope of activities of the Joint auction
  office
• allocating the daily capacity on the German
  borders
• Operating the explicit daily auctions on Belgium
  borders
• Coupling fallback
• Collecting and sharing the congestion revenue for
  the TSOs
• Harmonisation and improvement of the auction
  rules
• Brief of CWE Market Coupling project

91
Attempt to Harmonize in Europe (C5-102)

• definitions,
• products to be auctioned,
• participation requirements,
• financial guarantees,
• firmness of both allocated capacities and
  nominated programs,
• definition of force majeure,
• bids format,
• time schedule of the auctions,
• compensation/reimbursement in case of reduction,
• payment modalities,
• secondary market principles (use it or sell
  it),
• responsibility of parties,
• the suspension/termination of contract conditions.

92
C5-106 Czech and Slovak spot electricity market
coupling on the basis of implicit capacity
allocation

• Daily transactions between the two market areas
  take place exclusively in the form of implicit
  auctions.
• The implicit auction office is a virtual area in
  the information system of one of the market
  operators it ensures that sell bids and buy bids
  in the two market areas are matched.
• The virtual office is a part of both information
  systems, and the two market operators will
  alternate in performing the function of the
  virtual office.
• Implicit auctions are based on the principle of
  price coupling
• In the event of capacity constraints at the
  interconnection point the market splits, and two
  prices are created.
• In the event of transactions constrained due to
  congestion and market split, the price difference
  generates an implicit auction price that
  generates revenues allocated between the two
  transmission system operators.

93
C5-107 Multiple power exchanges in India a
case study

• Study of the experience gained from the operation
  of multiple power exchanges in a single physical
  delivery market in India
• Salient features of PX implementation in India
• Allocation of available transfer margins,
• Congestion management
• Interplay between the bilateral market, day-ahead
  market in Power Exchanges and the real time
  market.
• Issues
• Multiplicity of price signals
• Regulatory overlap forward price signals
• Regulatory uncertainty price caps
• Transmission pricing losses
• Balancing market guiding vector
• Available margins for the PXs
• Impact of block bids

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• Thank You for your attention !!
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