During the year 2004-05 (when trading started), the licensees voluntarily charged 5 paise/kwh or less as the trading margin. However, it increased in 2005 and the weighted average trading margin charged by the licensees went up to 10 paise/kwh during April to September 2005 period. The Commission then decided to regulate the margin and fixed the trading margin at 4 paise/kwh vide “CERC (Fixation of Trading Margin) Regulations” notification dated 26.1.2006. As a result of these trading margin regulations, the licensees charged trading margin of 4 paise or less from 26.1.2006 onwards until revised Trading Margin Regulations, 2010 on 11.1.2010 (see Figure) were issued.
Based on feedback and experience with 2006 regulations and considering various risks associated with the electricity trading business, CERC revised the trading margin in 2010. As per the CERC (Fixation of Trading Margin) Regulations, 2010, the trading licensees are allowed to charge trading margin up to 7 paise/kWh in case the sale price exceeds Rs 3/kWh, and 4 paise/kWh where the sale price is less than or equal to Rs 3/kWh. The trading licensees have been charging the trading margin accordingly, and weighted average trading margins for bilateral transactions during 2004-05 to 2012-13 is given in Figure.