New Delhi, Feb. 7 (PTI): The Central Electricity Regulatory Commission (CERC) today issued guidelines to set up and operate the much-awaited national power exchange.

The commission has allowed operational freedom to the power exchange within an overall regulatory framework. It has also allowed the private sector to participate in the exchange.

“The participation in the power exchange would be voluntary and no existing power purchase agreements and bilateral contracts would be disturbed,” CERC chairman A. K. Basu said.

A power exchange would basically function on the lines of commodity exchanges and provide a platform for buyers, sellers and traders of electricity to enter into spot and forward contracts.

At present, inter-regional power transfer capacity of around 6,000 mw is available in the country, which is expected to increase to about 9,500 mw in the coming few years.

With transmission capacity being put in place for large size inter-state projects, the inter-regional transfer capacity is likely to get further enhanced.

Basu said the commission seeks to encourage power exchange to emerge as a market-based institution for providing price discovery and price risk management to generators, distribution licensees, traders, consumers and other stake holders.

According to the guidelines, the promoters shall be required to develop their own model power exchange.