PowerPoint Presentation
P.S. ShekawatSuperintending Engineer(Power),Rajasthan State
Industrial Development & Investment Co. Ltd.
Consumers ProspectiveInOpen Access of power Is consumers choice
through open access an enforceable right?Impact of directive of
PSERC on short term Open AccessCan Open Access and Competitive
power generation bring down power cost for discoms and
consumersWill there be standby charges and cross subsidy surcharge
if MoP directives on Open Access are implemented
(30-11-2011)Operational constraints and roles of SLDCs and STUs
Open Access of Power
Powered Consumer to choose Power
Is consumers choice through open access an enforceable
right?
The Government of India (Ministry of Power and Ministry of Law)
in its latest interpretation on 30.11.2011 has articulated that
Section 42 of the Act makes it mandatory for all consumers with
load exceeding 1 MW to be open access consumers and that the
tariffs for such consumers shall not be regulated by SERCs.
Cont
Is consumers choice through open access an enforceable
right?
Section 42 of the Act deals with the provision of open access to
distribution and reads as follows: ((2) The State Commission shall
introduce open access in such phases and subject to such
conditions, (including the cross subsidies, and other operational
constraints) as may be specified within one year of the appointed
date by it and in specifying the extent of open access in
successive phases and in determining the charges for wheeling, it
shall have due regard to all relevant factors including such cross
subsidies, and other operational constraints: Provided that such
open access shall be allowed on payment of a surcharge in addition
to the charges for wheeling as may be determined by the State
Commission: Provided further that such surcharge shall be utilised
to meet the requirements of current level of cross subsidy within
the area of supply of the distribution licensee: Provided also that
such surcharge and cross subsidies shall be progressively reduced
in the manner as may be specified by the State Commission: Provided
also that such surcharge shall not be liveable in case open access
is provided to a person who has established a captive generating
plant for carrying the electricity to the destination of his own
use: Provided also that the State Commission shall, not later than
five years from the date of commencement of the Electricity
(Amendment) Act, 2003, by regulations, provide such open access to
all consumers who require a supply of electricity where the maximum
power to be made available at any time exceeds one megawatt.
Cont
Benefits to Consumer
Buy power from anywhere- could explore cheaper sources;
Specially useful for high demand industrial /commercial
consumer.Industrial houses could consolidate power supply to plant
at various locations and build captive power plant to achieve
economy.Give choice to consumer option to switch.Cheaper
power.Improved Efficiency .Better Reliability.
Impact of directive of PSERC on short term Open AccessPower
requirement varying unpredictable; which jeopardizes the system
reliability.No alternative for arranging excess power or
surrendering the power; thus PSPCL is financially affected.The
frequent shifting of OA consumers from PSPCL to Open Access and
again to PSPCL is affecting the quality of power to other
consumers.The OA consumers being the cross subsidizing category for
other consumer groups, this reduction of power off-take by them
from PSPCL power pool has adverse impact on the tariff of other
categories.Due to Open Access, the LS consumption is likely to
reduce which will hit the revenue and T&D losses of PSPCL
adversely. In order to prevent financial collapse of PSPCL,
appropriate safeguards e.g. cross subsidy surcharge and additional
surcharge as provided in the National Tariff Policy be levied on OA
consumers.
Cont..
Impact of directive of PSERC on short term Open AccessWith the
high end consumers migrating to Open Access without paying any
surcharge, the burden on distribution licensee increases which
ultimately results in increase in tariff of remaining about 70 lac
consumers. The PSPCL has intimated that due to 2513 MUs availed by
the Open Access consumers during 2010-11, it has suffered a loss of
Rs.371 crore and this loss is likely to increase to around Rs.1000
crore during 2011-12. If this loss is passed on to the remaining
consumers it will result in an unjustified hike in the tariff for
these consumers.
Can Open Access and Competitive power generation bring down
power cost for Discom and consumersElectricity Act 2003 has
mandated that with immediate effect open access should be
implemented. While everyone accepts that it may serve the consumer
interests, there are two contradicting views regarding the
implications of the open access system on the electricity entities
especially the DISCOMs. The first view is that competitive power
generation will bring down the ultimate costs to the consumers.
Cost reduction is possible only by reducing the T&D losses,
keeping under control the operating costs and keeping the
additional power purchase costs low. Given the facts that power
purchase costs keep increasing and the HT tariff has been mandated
to be brought down closer to the average costs (thereby reducing
the cross-subsidy) according to a fixed time schedule to be set by
the regulator, the first group argues that taking up additional
liabilty by way of HT consumers at such high marginal costs of
power purchase would be financially imprudent for the electricity
entities.
The other view is that electricity entities have heavy
responsibility to meet the needs of agricultural consumers and
small domestic consumers at a lower rate than the average cost.
Consumers who are currently the HT consumers and commercial
consumers paying a higher tariff are providing the means to do
this. If such consumers walk away from Grid supply subsidy from
Government will have to increase. The correct position would depend
on the statewise situation regarding relative tariff of the
different consumers, the possible rates of growth of category wise
consumption and the potential for purchasing additional power at
low rates in the future Can Open Access and Competitive power
generation bring down power cost for Discom and consumersIn open
access consumers of 1 MW and above are deemed OA consumer and shall
have choice of purchase power cheaper sources including
Discom.Discom/Transmission licensee shall be benefited by
collecting wheeling and transmission charges as additional income
over and above the income from retails sale of power to the
consumers below 1 MW.Power purchase quantum of discom shall reduce
and shall be limited only equivalent to supplying power to
consumers below 1 mw and commission shall decide the tariff only
for consumers below 1 MW hence ARR of Discoms shall be
substantially reduce.Sufficient power shall be available to discom
from Genco plants at chaper rate to supply power consumers below 1
MW and total load shedding shall be withdrawn to such
consumres.Expenditure account of discoms shall reduce because of
reduced employees strength and reduced working capital requirment
hence tariff for consumers below 1 MW shall reduce.Tariff will
change slowly to reflect the cost to serve and cross subsidy will
get reduced and may finally disappear. State government may give
subsidy in advance if it wants to lower the tariff for some
consumers.Large consumers: They would be allowed to access new
generation or put up their own captive plants. These consumers
would see a major reduction in their tariff and be allowed to shrug
off or reduce burden of the historical costs (stranded costs).
Will there be standby charges and cross subsidy surcharge if MoP
directives on Open Access are implemented (30-11-2011)The Ministry
of Power in its letter dated 30.11.2011 say that:
once a consumer becomes an Open Access consumer, the State
Commission shall no longer fix the energy charges to be paid by him
but will continue to fix the wheeling charges and surcharges in
accordance with the provisions of the Act.
Will there be standby charges and cross subsidy surcharge if MoP
directives on Open Access are implemented (30-11-2011)Electricity
entities have heavy responsibility to meet the needs of
agricultural consumers and small domestic consumers at a lower rate
than the average cost. Consumers who are currently the HT consumers
and commercial consumers paying a higher tariff are providing the
means to do this. If such consumers walk away from Grid supply
subsidy from Government will have to increase
Will there be standby charges and cross subsidy surcharge if MoP
directives on Open Access are implemented (30-11-2011)The tariff of
OA consumers shall not be regulated by state commission and the
heavy burden of cross subsidies shall not be loaded to such
consumers.The OA consumers shall not be consumers of discoms the
power requirement shall not be the part of ARR of discom.According
to national tariff policies the cross subsidy is linked with tariff
for the category of consumers decided by the commission who are
going out of net of Discom because of open access hence discom to
be compensated by cross subsidy surcharge but there shall no such
requirement in the change scenario hence such consumers will have
not to pay CSS on the power wheeled through Open access.
Operational constraints of SLDC and STUsThe operations of the
STU and SLDC are closely linked, and the organisational separation
of these two functions should be undertaken only after robust
systems and processes are established for interaction between the
two.Transition RiskSettlement of imbalances in power injected and
drawls.Effective Metering.Efficient pricing of
transmission.Management of congestion .
Roles of SLDC and STUsensure integrated operation of the power
system in a State.optimum scheduling and despatch of electricity
within a State in accordance with the contracts entered into with
the licensees or the generating Companies operating in that
Statemonitor grid operation. keep accounts of the quantity of
electricity transmittedsupervision and control over the inter-State
transmission system.be responsible for carrying out real time
operation for grid control and despatch of electricity within the
State through secure and economic operation of the State Grid in
accordance with the Grid standards and State Grid Code. Creating a
system of monitoring the grant of open access by SLDC in an
expeditious and non-discriminator manner.Cont
Roles of SLDC and STUsTo build, maintain and operate an
efficient, co-ordinated and economical inter-State transmission
system or intra-State transmission system, as the case may be; (b)
to comply with the directions of the Regional Load Despatch Centre
and the State Load Despatch Centre as the case may be;. (c) to
provide non-discriminatory open access to its transmission system
for use by- (i) any licensee or generating company on payment of
the transmission charges; or (ii) any consumer as and when such
open access is provided by the State Commission under sub-section
(2) of section 42, on payment of the transmission charges and a
surcharge thereon, as may be specified by the State Commission:
Provided that such surcharge shall be utilised for the purpose of
meeting the requirement of current level cross-subsidy: Provided
further that such surcharge and cross subsidies shall be
progressively reduced in the manner as may be specified by the
Appropriate Commission:Provided also that the manner of payment and
utilisation of the surcharge shall be specified by the Appropriate
Commission: Provided also that such surcharge shall not be leviable
in case open access is provided to a person who has established a
captive generating plant for carrying the electricity to the
destination of his own use.
Roles of SLDC and STUsto undertake transmission of electricity
through intra-State transmission system . to provide
non-discriminatory open access to its transmission system for use
by- (i) any licensee or generating company on payment of the
transmission charges; or (ii) any consumer as and when such open
access is provided by the State Commission under sub-section (2) of
section 42, on payment of the transmission charges and a surcharge
thereon, as may be specified by the Central Commission: Provided
that such surcharge shall be utilised for the purpose of meeting
the requirement of current level cross-subsidy: Provided further
that such surcharge and cross subsidies shall be progressively
reduced in the manner as may be specified by the State Commission:
Provided also that the manner of payment and utilisation of the
surcharge shall be specified by the State Commission: Provided also
that such surcharge shall not be leviable in case open access is
provided to a person who has established a captive generating plant
for carrying the electricity to the destination of his own use.
Conclusions Open access of power is in its ground stage and has
high potential for growthIt is a step towards commercialization of
power market with high growth potential. Removal of cross subsidy
and surcharge need to be done with a time bound program.Open Access
charges / losses based on commercial principles to optimize use of
existing assets and to encourage investment.Open access process,
charges and priorities need to be non-discriminatory
