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Electricity Trading at IEX

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In this presentation

Indian Power market

Who are we ?

Day-Ahead Market

IEX Journey so far

Membership

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Indian Power Market

Indian Power Market

Long Term Short Term

PPAs

Bilateral1 Direct

2 TraderExchange UI

1.Day Ahead2. Same day3. FCFS

4. Upto 3months

5. Banking

Day Ahead

1. I ntra day

2. DAC3. Daily4. Weekly5. Monthly

RealTime

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Long-term marketState Sector

generationCentral Sector

generationPvt

Sector

Generation

Electricity Market Segments(Oct,08)

Short-term

market (7%)

Bilateral Market (48%)

Through Traders

41%

Direct Trading

7%

UI (43 %) Exchange(9 %)

Short-term Market

As per CERC October MMC Report

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IEX : Who are we ?

Promoters

Joint Equity Partners:

Technology :

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Technology

The leading technology provider to the worldsmost liquid power exchange, NORDPOOL.

Also own all exchanges in Nordic countriesexcept NORDPOOL Spot

Also owns exchanges in the Nordic and Balticregions

Four power exchanges in Europe currentlyusing technology.

.

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Background..

CERC accorded approval to IEX tocommence operations 9th June, 2008

IEX Commences Live Trading 27th

June, 2008

IEX Files application for approval of

Term-Ahead Contracts (TAM) 2nd Sept, 2008

CERC asked NLDC & IEX to finalizechanges in procedures 18th Nov, 2008

CERC gave in-principle approval 27th Nov,2008

CERC amends the inter-state open 20th

May, 2009access regulations

IEX filed affidavit with modified Rules 22nd May, 2009

Bye Laws & Business Rules

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IEX - DAM Product Description

Order Types:

Hourly Orders

1 hour

Max/Min Price, Volume, Hour

Different Price-Quantity Pairs

Partial Execution Possible

Block Orders

Consecutive hours during the same day

Customize block bid allowed

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IEX - DAM Product Description

Order Characteristics

Firm commitment to purchase or sell

Min and Max order price

Portfolio and Block bids

Trading Availability

Every Calendar Day

Order Entry

Entry for orders related to Delivery Day (D day) possible on D-1

from 10:00 hrs to 12:00 hrs

Contract

Contract Size: Minimum 1 MWh Minimum volume step: 0.1 MWh

Minimum price step: Rs 1 per MWh

Total Contract Price: Order Volume multiplied by ACP

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IEX - DAM Product Description

Finalising Trades 24 hour prices at 15:00 hrs of D-1 day

Determine the trades accepted

Delivery Point Periphery of Regional Transmission System in which the grid-

connected exchange entity, is located

Settlement Daily settlement at ACP x Volume traded

Final settlement adjusted for any force majeure deviations

Security of Transactions IEX act as counter party

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Price (Rs./ kWh) 0 201 2 2.1 3 3.1 4 4.11.1

SalePurchase

Rs/kWh

MW40 80 120

2

3

4

Price

MW

2.5

Portfolio A, MW 20 020 020

SUM, Purchase 120 100 80 80 60 60 40 40 202060

Portfolio C, MW 40 -400 -12020 0 -120-80 -81-60

Portfolio B, MW 6060 2040 40 2040 4040

SUM, Sale 0 0 -40 -120-120-80 -81-60

Net transaction 120 20 -100-80-20 -21100 80 80 -1000

0

50

100

150

200

250

-150 -100 -50 0 50 100 150

MW balance

P

rice($/MWh)

0

50

100

150

200

250

-150 -100 -50 0 50 100 150

MW balance

P

rice($/MWh)

1

2

3

4

5

Rs

./kWh 2.52.5

2 .5

6 0

MCP:

MCV (Market clearing volume):

Price Calculation Algorithm .each hour

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Trader Station: Single Bid

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Trader Station: Block Bid

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10:00 14:00 18:0012:00

MarketParticipants toplace their Bids

PX to send SchedulingRequest to NLDCbased on marginspecified by NLDC

RLDCs/SLDCsto incorporateCollective

Transactions inthe DailySchedule

PX to sendprovisionalunconstrained

solution toNLDC and flowon TS asinformed byNLDC

13:00 15:00

NLDC to checkfor congestion.In case ofcongestion shallintimate PX

regarding to theperiod forcongestion andavailablemargins

Time Line for scheduling of Collective Transaction

NLDC to

confirmacceptance.PX to send filesto SLDCs forscheduling

17:30

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Risk Management System

D-1 At 09:30 Hrs : Pre-trade Margin Check.

equal to the initial margins or average of last 7 days trading

value, whichever is more. D-1 At 12:30 Hrs : Preliminary Obligation Margin Check

Preliminary Obligation =< Funds Available (incl initial margin)

Block funds.

D-1 At 15:30 Hrs : Pay-ins

At D+1 14:00 Hrs : Pay-out.

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Benefits to Participants Better Price Discovery

Neutral and unbiased platform More transparent price discovery mechanism

Less Overheads

Reduces search cost No hassle of transmission corridor booking No negotiation

Payment Security undertaken by PX

Healthy cash flow as pay-out on immediately after delivery date Better Price Signals

Empowers demand-side responses to price-signals and moreeconomic grid operation

Provides long-term and short-term price signals

Single-point check on non-competitive practices (market power, pricemanipulation etc.)

Priority over 3 day ahead for IEX transaction

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IEX Participant Snapshot (till 31stJuly09)

11,440

(MW)

3,340

(MW)

SLDC Clearance to trade(Active Members & Clients)

364Captive Power Plants

28101Active members/Clients

31125Total no. of Member/Clients

PublicPrivate

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Increase in Participants (till 31st July, 09)

IncreasingParticipations

7369

34

2427202116136

25 24

3536

156147

89

79 81

95

72676462

123

78

58 57

0

30

60

90

120

150

June

'08

July'

08

Aug'08

Sept'

08Oc

t'08

Nov'0

8

Dec'0

8

Jan'09

Feb'

09

March

'09

April'

09

May'

09

June

'09

July'

09

Months

No.

ofParticipants

Maximum Active Portfolio

Member & Clients

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Volatility of Day-Ahead Market(Min& Max price in a day)

Price

(RS/MWh)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1-Ma

y

8-Ma

y

15-M

ay

22-M

ay

29-M

ay5-

Jun

12-Jun

19-Jun

26-Jun

3-Jul

10-Jul

17-Jul

24-Jul

31-Jul

Delivery day

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Wide-ranging participationacross the nation

23 states & 4 UTs 129 portfolios

Smooth Coordination with System Operators

Adequate Liquidity (June 31st July09) 4.22 BUs Cleared Volume (single side) Rs 3,398 Crs Turnover

All time high of

26.43 MUs(20thJune,09) 28.27 MUs unconstrained (3rd July 09)

IEX: Performance so far

IEX

PXI

IEX

PXI

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Nationw ide acceptance

StateUtilities

CPP

GreenPower

Total Participants156

Open Accessconsumer

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DAM: Demand Supply Gap

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

28-J

un-08

29-J

ul-08

28-A

ug-08

27-S

ep-08

27-O

ct-08

26-N

ov-08

26-D

ec-08

25-J

an-09

24-F

eb-09

26-M

ar-09

25-A

pr-09

25-M

ay-09

24-J

un-09

24-J

ul-09

Date

Volume(MWh)

0

1500

3000

4500

6000

7500

9000

10500

12000

13500

15000

A

vgprice(Rs/MWh)

Total Sale Bid(MWh) Total Purchase Bid(MWh) Average MCP

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IEX Score (till 31st July, 09)

IEX Price & Volume Trend

434

478

323

379

75

233 279

376

450

355291

180

377

0.42

4.62

6.20 6.41

10.47

7.668.36

6.425.62

6.14

7.568.46

7.687.507.73

0

100

200

300

400

500

600

June 08 July 08 Aug 08 Sept 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 March 09 April 09 May' 09 June' 09 July'09

Months

M

onth

ly

Volum

e(M

Us

0

2

4

6

8

10

12

Price

Rs/kW

h

Total Monthly Volume (MUs) Monthly Avg Price (Rs/kWh)

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IEX Hourly MCV & MCP( April 2009)

IEX Average Hourly MCV & MCP for April, 2009

0

100

200

300

400

500

600

700

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hours

Volum

e(MWh)

0.00

1.00

2.00

3.00

4.00

5.006.00

7.00

8.00

9.00

10.00

11.0012.00

13.00

Prices(Rs/kWh)

MCV(Hourly) MCP(Hourly)

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IEX Average Hourly MCV & MCP for June 2009

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hours

Volume(MWh)

0.00

1.00

2.00

3.00

4.00

5.006.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

Prices(Rs/kWh)

Hourly Avg. Volume Hourly Avg. Price

IEX Hourly MCV & MCP( June 2009)

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IEX Hourly MCV & MCP( July 2009)

IEX Average Hourly MCV & MCP for July 2009

0

100

200

300

400

500

600

700

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hours

Volume(MWh)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

Prices(Rs/kWh)

Hourly Avg. Volume Hourly Avg. Price

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MEMBERSHIP

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Entities eligible for Membership:

Inter-State Generating Stations (ISGS)

Distribution Licensees

State Generating Stations

IPPs

CPPs and IPPs(with consent from SLDC)

Open Access Customers(with consent from SLDC)

Electricity Traders / Brokers

Who Can become Members of IEX ?

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IEX Membership Category

Proprietary Member (*) Professional Member(right to trade and clear on its own account) (trade and clear on his own account & on behalf of its Clients)

Generator

Distribution licensees

IPPs, CPP & MPPs

Open access consumers

Grid-connected Client (*) Trader Client

(eligible to buy or sell electricity and is

connected to the grid.)

(is eligible to trade in electricity

under the Electricity Act, 2003

and has a legally valid power

purchase/sale agreement,

which gives the Client the rightto purchase and sell electricity )

Generator

Distribution licensees

IPPs, CPPs & MPPs

Open access consumers

* Denotes that foll. Entities requires Standing Clearance from SLDC

Electricity Trader

Financial Brokers

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Membership Category and Financial Requirements

Membership Category: Proprietary / Professional Member

The financial criteria for payment options available on IEX are:

Rs. 22,60,000Rs. 65,10,000TOTAL

Rs. 10,000Rs. 10,000Processing Fees

Rs. 2,50,000Rs. 5,00,000Annual SubscriptionFees

Rs. 10,00,000Rs. 25,00,000Interest Free Security

Deposit

Rs. 10,00,000Rs. 35,00,000*Admission fee

Proprietary member

(Light Payment Option)

Professional & Proprietary

member(Full Payment Option)

Fees

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How to Move Ahead

Become Member Rs 22.6 Lacs +2p/kWh transaction fee

or

Rs 65.1 lacs + 1p/kWh transaction fee

or Client @ 1Lakh

Standing Clearance from UTs/State SLDC Eligibility

ABT Meters Sufficient transmission capacity

Terminal for Trading: Connectivity with exchange can be done in two ways

Internet Immediate

Leased Line

Start Buying from IEX or Sell surpluses to IEX

IEX I i i i

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IEX InitiativesContinuous communication with Users

IEX Daily SMSService for

Trade Details

IEX MonthlyBulletin

IEX hourlyTrade Pricesdisplayed onits website

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