Concentration of market power: Number of traders and HHI based on volume of electricity transacted by the traders
Level of competition among the trading licensees (HHI based on volume of trade undertaken by the licensees) is shown in Figure for the period 2004-05 to 2012-13. Number of inter-state trading licensees, who were undertaking trading bilaterally or through power exchanges, increased from 4 in 2004-05 to 12 in 2012-13. It can be observed from the figure that there is an inverse relationship between number of trading licensees and the HHI. The concentration of market power declined from high concentration (HHI of 0.5512) in 2004-05 to non-concentration (HHI of 0.1437) in 2012-13. The competition among the trading licensees resulted in increase in volume and decrease in prices in the short-term bilateral market.