REC market may crash if state distribution companies don't meet their RPO

According to and article in the Economic Times, REC markets have crashed in the recent months (see trade results of Oct 2012 and Sept 2012 here) as the state power distribution companies have not yet met their obligation by purchasing RECs. Due to lack of enforcement by SERCs on the obligated entities, RECs are not being purchased. As a result the demand supply gap is has widened, resulting in the crash in prices to the floor price and large inventory buildup in the market. The article suggests that quick and strict enforcement action is the only way for the market to survive.
Rajesh K Mediratta, senior VP (Business Development), Indian Energy Exchange said ,”If energy certificates are not sold, their incentive for generating power declines” .He also said that,” “Prices of certificates are falling due to lack of demand although supplies are on the higher side, pushing prices downwards. Distribution utilities are not buying enough certificates to fulfil their obligations”.
Also see:
States fail in meeting their Renewable Purchase Obligation for 2011-12
Rajasthan High Court judgment will strengthen RPO enforcement