Section 30 in Central Electricity Regulatory Commission (Power Market) Regulations, 2010
30. Default remedy mechanism on Power Exchange or Clearing Corporation.
- (i) A member may be declared a defaulter by direction or circular of the Power Exchange or Clearing Corporation if:(1)he is unable to fulfill his clearing or settlement obligations; or(2)he admits or discloses his inability to fulfill or discharge his duties, obligations and liabilities; or(3)he fails or is unable to pay within the specified time the damages and the money difference due on a closing-out effected against him under the Rules, Bye Laws of Power Exchange or Clearing Corporation ;(4)he fails to pay any sum due to the Power Exchange or Clearing Corporation which may be prescribe by them from time to time ; or(5)he fails to pay or deliver all moneys, electricity or other related assets due to a member who has been declared a defaulter within such time of declaration of default of such member in such manner and to such person as the Power Exchange or Clearing Corporation may direct; or(6)he fails to abide by the arbitration award as laid down under the Rules, Bye Laws and Regulations of Power Exchange or Clearing Corporation ; or(7)under any other circumstances as may be decided by the Power Exchange or Clearing Corporation from time to time.Provided that Power Exchange or Clearing Corporation may, at its discretion, stipulate any additional criteria to declare defaulter in the Power Exchange or the Clearing Corporation as the case may be(ii)In the event a member is declared a defaulter and the member fails to meet the clearing and settlement obligations, the Power Exchange shall give precedence to the payment of transmission charges, scheduling and system operation charges from the deposits of the member or client as the case may be. Thereafter the Power Exchange may utilise the Settlement Fund and other monies to the extent necessary to eliminate the obligation of the defaulting member in the following order-(1)Liquidation of collaterals: Contributions or deposits, including margins in any form, by the defaulting member or client.(2)Liquidation of security deposit: Membership deposit given by the defaulting member to the Power Exchange.(3)Insurance money: Insurance taken by Power Exchange of an amount as considered appropriate by the Power Exchange for protection against defaults.(4)It's Initial contribution as considered appropriate by the Power Exchange towards Settlement Guarantee Fund.(5)Current year's Profits of the Power Exchange including Fines, penalty collected from members.(6)Reserves of the Power Exchange.(7)Contribution towards settlement guarantee fund by all members or clients:- All non-defaulting members or client's contribution in proportion of deposits towards Settlement Guarantee Fund.(8)Equity Capital of the Power Exchange.(9)Balance obligations remaining outstanding after above funds will be met by contribution from members or clients in proportion to their contribution to the SGF.Provided that once the Clearing Corporation is hived off, the default remedy mechanism shall be handled by the Clearing Corporation and the Power Exchange shall not be held liable on this account.
