RPO Compliance May be Required More Frequently

After the low trading volumes in April, we strongly advocated quarterly compliance in order to make the REC market functional.
Now it has been reported that the CERC has been actively considering such a proposal (See Business Standard article here). An official from CERC said “It is proposed to make it mandatory for the states to meet a certain percentage of their entire five per cent RPO biannually or four times a year. Discussions are underway with various stakeholders right now.”
Our May 2011 newsletter (currently available only to subscribers) also highlighted this point, and presented data from other countries where quarterly compliance is the norm.
This will be a very important policy change, particularly because in the current set-up the market will be skewed towards the last quarter of the year as obligated entities do not have to meet RPO requirements till the end of the year (March 2012).
Another key aspect is the demonstration of enforcement. State regulators should use the March 2011 window to notify the obligated entities. Unless that is done, a key question that will remain the minds of REC buyers is whether RPO regulations will be enforced. With such a doubt, no market can take off.