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The Bombay High Court on Monday asked the electricity market regulator, Central Electricity Regulatory Commission (CERC), and the forward markets regulator Forward Markets Commission (FMC) to set up an expert body to resolve the issue over the norms on futures and forward trading in electricity.
Pronouncing the judgment, Mr Justice Anoop V. Mohta, said it will not be possible for either FMC or MCX to control and regulate the mandatory requirements of electricity at various stages, which are within the exclusive domain and control of CERC.
“It will create more complications than solving it, unless an expert body constituted and specialised rules and regulations are framed. Both FMC and CERC cannot deal in futures and forward contract in electricity excluding each other or independently,” he said.
Workable solution
It is not only a question of resolving the conflict between two entries or mandates of the respective specialised Acts, but an actual and physical workable solution to allow either authorities, commissions and exchanges to deal with the electricity in the futures and forward market.
“Both FMC and CERC under the respective Acts may not be in a position to control and regulate the futures contract in electricity exclusively, unless those Acts and regulations are amended and reframed. Both cannot have exclusive jurisdiction as claimed in the present scenario in India,” he said.
Post the High Court judgment, the regulations of CERC as notified on January 20, 2010, which deals with the aspects of futures contracts or forward contracts, therefore, are inoperative to that extent only.
The impugned order of April 28, 2009, and order dated January 11, 2010, upholding the regulations are also unsustainable to the extent of reasoning and direction relates to forward contracts in electricity, he pointed out.
According to the CERC notification, all exchanges have to register with the CERC for forward or future trading in the power market, which was contested by MCX in the Bombay High Court and sought a stay on it. The FMC was also opposed to the notification.
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