Mumbai: Indian Energy Exchange Ltd (IEX), the country's first power bourse, is all set to commence operations at the Multi Commodity Exchange of India (MCX), after it received regulatory clearance from the Central Electricity Regulatory Commission (CERC).

IEX, the country's first national level demutualised power exchange, is promoted by MCX parent company Financial Technologies along with power trading firm PTC India Ltd.

Other stakeholders include Tata Power, Reliance Energy Ltd, Infrastructure Development Finance Co Ltd, Lanco Infratech, state-run Rural Electrification Corp and Adani Enterprises Ltd.

The energy exchange will act as a trading platform for electricity where electricity generators, distribution licensees at the national level can trade for smaller quantities and smaller number of hours without additional overloads.

Price of electricity on the IEX, a spot exchange, will be decided on the basis of actual demand/supply of energy and will be determined on the basis of bids and offers during the transaction period.

While commodity exchanges trade in futures IEX will trade only in spot electricity transactions that will settle with delivery of electricity.

IEX will be a delivery-based exchange and Power Grid Corporation will manage the transmission and scheduling of power.

Bids and offers from prospective buyers and sellers will be submitted for each hour of the next day (hourly contracts) to IEX, during the bid call period, ie from 10 am to 12 noon, and the same will be displayed on the screens of the IEX trading work stations (TWS). Trades matched by the exchange mechanism will be settled at a uniform market clearing price (MCP), and flow of electricity will be arranged through the inter-state transmission system (regional grids).

IEX will be the key change agent for reaching an equilibrium price at which demand and supply would meet for all the buyers and sellers on a single platform and at a common national price without any risk of counterparty, which will be guaranteed in the exchange mechanism.

IEX will be the counterparty for all settlements to ensure payment security. The power exchange will provide a tool to minimise price risks. IEX will take into consideration the demand supply mismatch all over the country, including Maharashtra, Financial Technologies said in a statement.

As the market matures, IEX, with approval from the regulator, will introduce a host of other products, the release added.