The electricity market establishes a price for its commodity through the basic economics principle of demand and supply. However, an electricity market 38produces the commodity for immediate consumption even though the requisites for creation and classification of the markets such as quality, quantity, price etc. remain the same as those of other traditional markets. In the Indian scenario, the power exchange has matured rapidly in spite of initial low volumes and high prices. Though bulk of the electricity continues to be contracted through bilateral long-term power purchase agreements (PPAs), the ‘electricity market’ refers to trading at the power exchange.