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Jayant Deo, an expert in energy sector and the advisor to the Indian Energy Exchange, is a multi faceted personality with knowledge of almost every field. He joined the Maharashtra Electricity Regulatory Commission (MERC) in August, 1999, as a member. Deo strongly believes that the regulatory framework is essential for democratic working. He always advocated introduction of ERCs in India.

During his 34 year stint with industrial engineering, Jayant Deo was exposed to various aspects of electricity industry. As an independent resource optimisation consultant, he has helped several industrial units in India improve their bottomline. For the past three years he has been promoting the concept of power exchange a common platform for buying and selling power under Electricity Act 2003.

His efforts have been fruitful and India's first power exchange will go Live in the first quarter of 2008. He is also member of various institutions, including World Energy Council, Institution of Engineers India and Energy Conservation Committee of GOM.

Deo spoke to Commodity Market Editor in Chief Binu Alex on various issues in the energy sector.

How will a consumer benefit from MCX's Indian Energy Exchange?

The Electricity Act 2003 is based on the philosophy that consumers benefit through competitive markets. The Act has de licensed generation, encouraged captive power by allowing them to sell almost half of the generation, without any licence requirements. Multiple players are required for competitive markets. This is done by allowing multiple licences in the same area and also allowing 'Open Access' to all consumers needing more than one megawatt power and to all generators and also to Licences. '

Open Access' means non discriminatory use of wires and related infrastructure, on payment of user charges and subject to availability of capacity. Thus, the consumer is provided with choice of suppliers, including his own captive unit, which can be located anywhere in the country. Even group of consumers can come together (even without any incorporation) for setting up captive units. This is certainly going to help build up competition, and increase in supply.

How can the captive power plants get benefit from energy trading?

By selling surplus capacity through trader and/or on exchange the capacity utilisation can be raised to optimum level thereby reducing fixed cost component. This will in turn attract those captive plants which cannot be economically justified on self use. Also by buying power whenever captive plant is down for maintenance, the need for standby capacity and capital for it is eliminated.

The Indian government has committed affordable power for all by 2012. Will trading of energy help achieve this? How?

The trading platform of Indian Energy Exchange has already started attracting merchant power plants, which was not financed earlier, for lack of assured market. Thus capacity additions by captive and merchant power plants are going to help increase availability of power. As far as affordability is concerned, the competition is bound to give benefits as is the case with mobile telephony.