CERC's staff paper on capacity markets proposed three potential uses cases for capacity markets: 

Use Case 1: Meeting Resource Adequacy (RA) Obligations 
Use Case 2: Meeting Reserve Requirements
Use Case 3: Procuring Short-Term Power from Existing Capacity

Prayas’s detailed submission in this matter focusses on the following: 

• Supports Use Case 2 (Meeting Reserve Requirements) but recommends that clear specification of NLDC net cone determination methodology for cap fixation, frameworks for capping and screening of energy/ compensation charge and methodology for determination of commitment charge. These aspects can be detailed by CERC in consultation with NLDC after approved after public consultation. 
• Recommends replacement of fragmented contracts such as LDC, ADSS and DEEP with standardised block-bid contracts on power exchanges across six pre-specified time slots. This can help increase liquidity in short-term markets more than proposed capacity design in Use Case 3. 
• Advises a cautious approach while exploring capacity markets for long-term resource adequacy (Use Case 1).  This is due to risks of inflated capacity bids/ net CONE, distorted market price signals, constraints on future market evolution, transmission cost uncertainties, and DISCOM cash flow challenges. As an immediate alternative, strengthening of enforcement of Rule 9 of the LPS Rules is recommended, with targeted amendments proposed to make compliance workable.