Section 4 in The Bihar Electricity Regulatory Commission (Licencing for Intra-State Trading in electricity) Regulations, 2007
4. Capital adequacy and credit worthiness to qualify as a trader.
(1)The applicant shall declare to the Commission the maximum trade volume which he can handle in a month and his future plans of trading during the initial three years.(2)The applicant shall maintain the capital adequacy and the net worth, sufficient to cover the maximum trade volume supported by documentary evidence over an average settlement period of 30 days (one month) worth of credit for the applicant as an electricity trader, subject to the limits specified in sub-regulation 3(2)(c) above.(3)The trader shall make endeavours to maintain investment grade credit rating from an independent Credit Rating Agency through the period of licence.(4)The capital adequacy shall be a dynamic function, which shall be based,(i)on the quantum of trade, which the trader is allowed by the Commission based on the business plan submitted by the trader;(ii)it shall correspond to the pool-rate of the power handled by the trader along with company expenses.(iii)trade risks on account of default in payment and change in price adjusted on six monthly basis by corresponding adjustments in the equity of the trader over and above the initial limit of capital adequacy fixed by the Commission.(5)Credit worthiness of the trader shall correspond to percentage trade default in relation to the capital adequacy for three settlement periods. The credit worthiness shall be revised every six months along with the revision in capital adequacy as deemed fit by the company.(6)The Commission, shall fix trading margin to the electricity trader.
