The Stock has developed a market coupling phobia! The moment that word is mentioned, it gets the bears activated

The key assumption is that with 95% of volumes being done at IEX, its ability to discover the best price will keep the volumes coming at this very exchange!

The management and market participants feel (as seen in response to the white paper) that the government is focusing on the wrong issue! The key issue is that 95% of volumes don’t happen in any of the exchanges…but happen offline through PPAs. So something needs to be done from the regulatory point of view to first get everybody to the market.

The Government on the other hand feels that the Market coupling mechanism will make the PPAs irrelevant and hence we must have that first in place.

I don’t think the market understands the IEX promoter’s ability to spot an opportunity ahead of the pack ( IGX, Carbon Credit Exchange & Recycling being the latest) so IEX’s ability to capitalize on emerging opportunities remains unchallenged…market coupling or no market coupling!

#biased

These questions are important.

In an interview earlier today, as broadcasted on CNBC Awaaz, power minister R K Singh mentioned that power shall be supplied to the whole country at the same rate and decision shall soon be made on market coupling.

Requesting members to share insights on this comment from the minister. There was news few weeks ago about discarding market coupling altogether. Is there a U-turn by the government? In plain and simple terms, essentially, what the honorable minister is saying, is that every GenCo shall be forced to produce power at a fixed rate and every distributor shall be forced to transmit power at the same rate to anywhere in the country. How is that ever going to be possible? I am not sure how a single price mechanism can ever be implemented in such a big and diverse country like India. The costs for producing and transmitting power in different parts of the country would be different, based on the raw material, logistics and other expenses. Also, any power producer, say one offering power at lowest cost, would still have limited capacity. This lowest cost producer of electricity can no where come close to meeting the demand of a certain region, forget the entire country. So, as long as demand exceeds the lowest cost supply, customers would be forced to revert to higher cost producers.

What am I missing!?

Or does this comment indicate willingness towards MBED? Meaning, MBED would ensure a common mechanism for best price discovery, which may be what the minister was indicating? If that’s what he meant, then isn’t this a positive for IEX? But if so, why the big fall today!?

Any insights from esteemed members of the group are highly appreciated.