N E W S A N D I N F O R M A T I O NIEX Bulletin

NOvEMbER'17 ISSUE 11 | vOlUME 4

ISO 9001:2008, 27001:2013, 14001:2004

www.iexindia.com | 01

In thIs Issue...

PAGE REGUlATORY NEWS

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01 GERC issues order on Additional Surcharge

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01 KERC issues order for Open Access consumers

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01 TNERC invites comment on Additional Surcharge

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01 PSERC issues Tariff Order for FY-18

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03 Electricity Market Update

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04 REC Market Update

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04 ESCert Market Update

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05 Trade Data: October’17

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07 A closer look at the power price dynamics at the Exchange

REGUlATORY NEWSGERC issues order on Additional SurchargeIn the Order No. 4 of 2017, GERC an Additional Surcharge ̀ 0.61 per kWh to be levied on the open access consumers of all the distribution companies for the period of 1st October 17 to 31st Mar 2018. The current surcharge is ` 0.12 per unit higher than the previous surcharge of ` 0.40 per unit. This increase might adversely affect the viability for the open access consumers. The change in the additional surcharge in last few half yearly cycles is as below:

1 Apr-30 Sept 2016

1 Oct 16-31 Mar 2017

1 Apr-30 Sept 2017

1 Oct 17-31 Mar 2018

Addl. Surcharge (`/kWh) 0.49 0.44 0.49 0.61

More information: www.gercin.org

kERC issues order for Open Access consumersOn 24.10.2017, KERC issued an order for open access consumers in matter of drawl above Open Access schedule. The highlight of the Order is as below.

An Open Access Consumer having contract demand of the BESCOM drawing power from the Grid, during the period when there is no injection of power due to outage of generator or in excess of the open access drawl schedule, will be charged on the regular tariff as applicable in the contract whereas those exceeding the contract demand will be charged with the tariff for temporary connection applicable to that category of consumer on the said quantum.

An ‘Exclusive Consumer’ of the BESCOM availing Open Access and drawing power from the Grid, during the period when there is no injection of power due to outages of generator or in excess of the open access drawl schedule, shall be charged at the tariff for temporary connection applicable to that category of consumer for the said quantum of power.

More information: www.karnataka.gov.in

TNERC invites comment on Additional SurchargeTANGEDCO filed a petition before TNERC for imposition of Additional Surcharge on Open Access consumers. In the petition, TANGEDCO has proposed additional surcharge @ ` 1.91/Unit payable by open access consumers. For this, TNERC has sought comments for it from the various stakeholders before 20th November, 2017.

More information: www.tnerc.gov.in

PSERC issues Tariff Order for FY-18On 23.10.2017, PSERC has issued tariff order of PSPCL for Financial Year 2017-18. The highlights of the order are as follows:

� Implementation of the Two Part Tariff Structure with effect from FY 2017-18. � By virtue of subsidy by Govt. of Punjab to industrial consumer, energy charges has been capped at 5 `/kWh as well as the fixed charges in the current tariff order for the period of 5 years.

� The difference due to this tariff would be borne by Government through subsidy which is around ` 2,767 crore and is not included in the total subsidy payable by Government of Punjab during FY-18, i.e. ` 10,917 crore.

02 | www.iexindia.com

Tariff Determined by PSERC

FY 16-17 FY 17-18

Tariff Energy Rate (Paisa/KVAh)

Monthly Minimum Charges (MMC)

(`/KVAh)

Energy Rate (Paisa/KVAh)

Fix Charges (`/KVA)

Industrial Consumers-Large Supply

General Industry 603 188

Above 100 KVA & upto 1000 KVA 5.70 140

Above 1000 KVA & upto 2500 KVA 5.74 195

Above 2500 KVA 5.78 230

PIU/Arc Furnace 622 491

Above 100 KVA & upto 1000 KVA 5.74 160

Above 1000 KVA 5.98 295

Rebate

Consumer Supply Rebate under the new tariff400/220/132 kV ` 0.30/KVAh

66/33 kV ` 0.25/KVAh

11 kV ` 0.20/KVAh

Large and Medium industrial category consumer ` 1.00/KVAh

� The Commission has determined the ‘Pooled Cost of Power Purchase’ (APPC) as 3.82 `per kWh.

Power Purchase cost for FY-18

Average Power Purchase Cost (`/Kwh)Variable cost Fixed cost Total

2.35 1.77 4.11

Open Access Charges

Open Access Charges FY 16-17 FY 17-18 Increase (+)/Decrease (-)Wheeling charges 132 142 Paisa/Unit 10

Transmission & Distribution losses

At 132/220 kV 2.50% 2.50% 0

At 66/33 kV 4.36% 4.31% -0.05%

At 11 kV 7.47% 7.32% -0.15%

Cross subsidy surcharge 0

Large supply 70 71 Paisa/Unit 1

Large Supply General Industry 67 67 Paisa/Unit 0

Large Supply PIU/Arc Furnace consumers 69 69 Paisa/Unit 0

Transmission Charges 23 22 Paisa/Unit -1

Renewable Purchase Obligation � Commission has approved purchase of Non-Solar RECs against 443 MU for RPO compliance of FY-18 and rest will be met through RE purchase.

� PSPCL already filed a petition to carry forward Shortfall of Non-Solar RPO of 2,225.03 MUs of past period to FY-18, which commission is yet to decide on the matter.

The revised tariff is applicable from April 01, 2017 till March 31, 2018, until and unless specified otherwise in this Tariff Order.PSPCL shall recover the arrears of the revised tariff from the consumers in equal installments, along with regular bills, from October, 2017 to June, 2018.More information: www.pserc.nic.in

www.iexindia.com | 03

MARkET NEWS Electricity Market Update : October’17The day-ahead power market at IEX for the first time ever witnessed the convergence of market prices all over India for all hours in a day for the entire month of October realizing the One Grid, One Price aspiration.

The average Market Clearing Price (MCP) for the month at ` 4.08 per unit was almost same as in September’17 and was 66% higher over ` 2.46 per unit in October’16. The average MCP during different time-periods of the day was:

� Morning (07:00 to 10:00 Hrs) - ` 3.74 per unit

� Day (11:00 to 17:00 Hrs) - ` 3.90 per unit

� Night (01-06 Hrs and 24 Hrs) - ` 3.65 per unit

� Evening peak (18:00 to 23:00 Hrs) - ` 5.00 per unit

A total volume of 4,079 MU was cleared, almost same as trade volume of last month and about 13% more over 3,609 MU traded in October’16. On a daily average basis about 132 MU were traded.

With average daily sell bids at 169 MU against buy bids at 179 MU, the market largely remained a deficit market. The total sell bids during the month were 5,248 MUs and the total buy bids were 5,535 Mus.

REGIONAVERAGE DAILY BUY (MW) AVERAGE DAILY SELL (MW)

NETOct'17 Sep'17 Change (%) Oct'17 Sep'17 Change (%)

North East 151.88 210.16 -28% 313.48 162.82 93% SELL

East 1,653.90 1,884.87 -12% 1,090.46 1,293.73 -16% BUY

North 1,163.97 1,142.92 2% 1,191.76 1,470.29 -19% BUY

West 2,010.41 1,099.84 83% 1,193.21 1,658.07 -28% BUY

South 690.55 1,154.95 -40% 1,881.80 907.83 107% SELL

The table below gives the average daily buy-sell picture for Oct’17 vis-à-vis Sept’17:

The spot power price reflected the demand-supply dynamics in the market and the supply side saw several constraints viz. coal shortages, reduced hydro and wind generation affecting the market. The price of the power remained on the higher side through the month due to buy bids exceeding sell bids as well as supply side constraints.

The average daily market clearing price varied from ̀ 2.82 per unit to ̀ 5.62 per unit through the month. The price variation on a day to day basis in October’17 vis-à-vis October’16 as depicted below.

Participation

789 participants traded in the spot market on an average daily basis.

Term-Ahead Market

The term-ahead market saw the highest ever trade of 290 MU in a month, mainly in the Intra-day, Day Ahead Contingency and Daily market segments.

The TAM saw trade of 153 MU in September’17 and 266 MU in October’16.

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Total number of registered participants 3,544

Obligated Entity 2,681

DISCOMs 33

Open Access Consumers 2,458

Captive Consumer 145

Voluntary 20

Eligible Entity (Private Generators) 843

Highest participation in a session (March’15) 1,265

REC MARkET UPDATE : OCTObER’17

29,389 (9%)

18,132 (5%)

2,94,600 (86%)

Captive UserDistribution LicenseeOpen Access Consumer

Non-Solar Buyer Mix

Highlights of the trading session held on 25th October, 2017

A total of 3,42,121 Non-Solar RECs were traded in the REC trading session held on 25th October, 2017 at IEX. The Distribution Companies were the major buyers in this trading session followed by the Open Access Consumers.

The trade in October saw an increase of 17% over September 2017, when 2,92,482 Non-Solar RECs were traded.

In FY 2017-18, April to October, IEX traded 14.59 lac Non-Solar RECs, representing an increase of 21% in comparison to same period for previous fiscal, when 12.02 lac Non-Solar RECs were traded. In current fiscal, the trading did not take place in May and June due to stay order from the Hon’ble Supreme Court, which was vacated in July 2017 and Hon’ble CERC directed IEX to commence trading only in Non-Solar REC segment.

Participants

A total of 701 participants traded in non-solar segment. Overall, a total of 3,544 participants are registered in the REC segment at IEX. Of this, 843 are Eligible Entities (RE Generators) 2,681 are Obligated Entities (DISCOMs, Open Access Consumers & Captive Generators) and 20 are registered as Voluntary Entities.

An overview of participation in the REC Market at IEX as on 25th October, 2017.

ESCert MARkET UPDATE: OCTObER’17

hIGhlIGhTS OF ThE TRADING SESSIONS hElD DURING OCTObER, 2017PAT CYCLE 1

Date Sell Bid (ESCerts)

Purchase Bid (ESCerts)

Trade Volume (ESCerts)

Price Discovered (`/ESCert)

No. of Participants

3/10/2017 2,36,031 51,925 23,295 1,200 40

10/10/2017 3,48,587 64,459 43,078 1,000 52

17/10/2017 3,81,443 40,538 40,148 800 45

24/10/2017 3,49,806 42,271 41,455 600 52

31/10/2017 3,83,379 21,037 19,359 500 51

www.iexindia.com | 05

TRADE DATA: OCTObER’17

MONThlY PRICE SNAPShOT

AREA PRICE SNAPSHOT (`/kWh)

PARTICIPATION SNAPSHOT

Minimum MCP Maximum MCP Average MCP

` 4.08/kWh` 11.55/kWh` 1.20/kWh

MONThlY vOlUME SNAPShOT 1 MU = 1 Million kWh = 1 GWh

Average Daily

Volume

132 MUs

Unconstrained Volume

4,083

5,488

Cleared Volume

4,079

5,482

PurchaseBids

5,535

7,440

Sell Bids

5,248

7,054

VOLUME

Average Daily (MW)

TotalVolume (MUs)

Region Average Minimum Maximum

East, North East, West 4.08 2.82 5.62

North 4.08 2.82 5.62

South 4.08 2.82 5.62

Total Registered Participants

Open Access Consumers

Private Generators

Highest Participation

4,400+ 3,900+ 400+1,410

22nd June'13

06 | www.iexindia.com

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Total Volume (MWh)

Max Price (`/kWh)

Min Price (`/kWh)Contracts

2,07,453 10.73 1.41Day-Ahead Contingency

- – –Weekly

31,885 10.40 3.40Intraday

50,400 4.50 4.50Daily

RECPurchase

Bids Sell Bids Cleared (REC) Price (`/REC) Participants

76,11,747

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1,500

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3,42,121

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701

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Non-Solar

Solar

3,42,121

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After two month pause in REC trading (May and June’17), on 20 July 2017, the Honourable Central Electricity Regulatory Commission (CERC) advised IEX to resume trading in only Non-Solar REC Market.

Trade Session on 25th October, 2017

www.iexindia.com | 07

MARkET INSIGhTS

A closer look at the power price dynamics at the ExchangeThe Day-Ahead power market at IEX has seen a growth in cleared volume of 4,078 MUs in October 2017, which was an increase of 13% over October 2016. The daily average market clearing price also increased from ` 2.46/unit in October’16 to ` 4.07/unit in the month of October’17 for the same.

The prices discovered at the exchange are an outcome of the bids and offers received from the participants. A 65.85% jump in the price in October’17 vis-à-vis last year can be explained by looking at the purchase and sell bids received by the exchange in these two periods and understanding the overall demand supply scenario in the country at the time.

In October 2016, the daily average sell bids were as high as 9,772 MW as compared to the daily average buy bids which were around 5,772 MW, clearly indicating a surplus scenario and as a result of low demand with increased supply, the average prices were as low as ̀ 2.46/unit. However the trend was reversed in the month of October 2017, the buy bids surpassed the sell bids at the Exchange and were higher than the sell bids on an daily average basis by close to 400 MW thus pushing the prices on an average to ` 4.07/unit. The sell percent of buy was 169.3% in October 2016 as compared to 94.8% in October 2017.

The daily average bid pattern for the same month over the last year, as shown below clearly indicated that increased purchase and reduced sell bids in the month of October’17 led to a spike in prices at the Exchange as compared to last year. The trend was similar in the month of September’17, when the daily average sell bid of 7,085 MW was 88.9% of the daily average purchase bid of 7,969 MW and as a result the average clearing price hovered around ` 4.08/unit.

In fact, during the first half of Fiscal 2018 when the purchase bids at Exchange increased by 21%. The increase in the purchase bids indicates that there was larger participation by the buyers particularly Distribution companies on the Exchange platform. However, the cleared volume growth was close to 16% which was not commensurate with the increased buy bids as the sell bids only increased by 2%.

The purchase and sell bid pattern observed at the Exchange can be best put into perspective by understanding the overall demand supply scenario in the country during this time. Though the overall power generation has increased from 2016 to 2017, it has not been able to keep pace with the increase in the power demanded in the country. In the month of October 2017 compared to same month last year, while the peak demand and energy demand increased by 4.4% and 3.7% respectively, the power generation in the month of October’17 increased by only 2.84% compared to same month last year.

The major factor affecting the supply scenario was due to the acute coal shortage faced in the sector owing to the post monsoon effect, where the supply of coal to the thermal power plants was affected. The average coal stock at the power plants reduced to 8 days compared to 21 days last year. The thermal plants were using the coal stock available to meet the long term commitments and were unable to place bids in the short term market. Another reason for the decrease in the power generation was due to the decrease in wind and hydro generation. The hydro capacity as per the NLDC report dropped by 10% in the month of August, finally picking by on an average in the month of October by a very small fraction of 0.26%, while wind has seen a fall of 38.73% and 9.21% in the months of September, October respectively.

Month Average Purchase Bid (MW)

Average Sell Bid (MW)

Average Cleared Volume (MW)

MCP (`/unit)

October’16 5,772 9,772 4,851 2.46

October’17 7,440 7,054 5,482 4.07

Percentage change 29% -28% 13% 65%

MonthDaily Average Hydro Gen (MU) Daily Average Wind Gen (MU)

2016 2017 % Change 2016 2017 % Change

July 525 542 3.23 200 297 48.5

August 610 549 -10 209 215 2.87

September 511 505 -1.17 173 106 -38.73

October 380 381 0.26 76 69 -9.21

November (till 13th Nov) 262.85 278 5.76 39 49.31 26.43

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Indian Energy Exchange LimitedUnit No. 3,4,5 and 6, Fourth Floor, TDI Center, Plot No. 7, District Center, Jasola, New Delhi-110025 | CIN: U74999DL2007PLC277039

Phone: +91-11-43004000 | Fax: +91-11-43004015 | Email: iex-bd@iexindia.com | www.iexindia.com

/IndianEnergyExchangeLtdIEX @IEXLtd|

IEX Listing Ceremony at BSE: (L to R) Mr. H. Nemkumar, Head-IIFL-Institutional Equities, Mr. P. Ramesh, MD-Kotak Mahindra Capital, Mr. Dharmesh Mehta, MD & CEO-Axis Capital, Mr Rajesh K. Mediratta, Director-Business Development-IEX, Mr. S. N. Goel, MD & CEO-IEX,

Mr. Ashish Kumar Chauhan, MD & CEO-BSE, Mr. D. K. Mehrotra, Chairman-IEX, Mr. Akhilesh Awasthy, Director-Market Operations-IEX, Mr. Vineet Harlalka, CFO & Company Secretary- IEX, Mr. Sanjay Mehrottra, Head-Investor Relations-IEX & Dr. Paresh Paul, CTO-IEX

The double whammy was the increase in prices of imported coal, as per the Department of Commerce’s latest release, there has been a 32.2% hike in the prices of imported coal in the Apr-Aug’17 period vis-à-vis last year eventually affecting the prices.

Another aspect to look at the pure demand supply dynamics at exchange is the daily price movements. The spot market realized one nation, one grid one price for most of the days in various regions of India but the prices seem to follow a trend for the month of October 2017. On an average the prices are high up till October 19, 2017 for all the regions, finally falling by 12% on the very next day due to the Diwali festival. As a result of subdued demand owing to Diwali celebrations across India, the market clearing prices witnessed a low of ` 2.90/unit on the exchange. A similar pattern was observed in October 2016, when Diwali was on October 30 after which there was a sudden fall in the energy demand leading to a consecutive fall in the price of electricity in the Day Ahead market on the exchange.

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