Issues on Open Access

The role of Electricity Regulator

What is Open Access
 Traditionally a Distribution company by
default is also the power supplier, i.e. the
Owner of Network is the Owner of Power

 Under the new law of 2003, separation of

roles is mandated. If the network capacity
permits, Distribution company has to
transport power supplied by other agencies.

 Ultimate consumer is thus free to choose his

own power supplier. Power of his choice
would flow through the network of
 Open Access Charges
1. Cross Subsidy Surcharge
2. Additional Surcharge
3. Transmission Charges
4. Transmission Loss Compensation
5. Wheeling Charges
6. Wheeling Loss Compensation
7. Default Supply Charge
8. Balancing Market Charge
9. OA Application Charges
 Cross subsidy surcharge
Cross Subsidy Mechanism according to NTP,
S = T - [ C (1 + L/100) + D ]
S = Surcharge
T = Tariff payable by consumer category
C = weighted average cost of power purchase of top 5% at
the margin excluding liquid fuel based generation and
renewable power
D = Wheeling Charge
L = is the system losses for the applicable voltage level ,
expressed as a percentage
 Cross Subsidy Surcharge
Policy provision
 Surcharge should be brought down progressively and as far as possible at
linear rate to maximum of 20% of opening level by FY 2010-11.
 Surcharge may be collected by Distribution Licensee or Transmission
Licensee or CTU or STU depending upon whose facilities are used.
 Amount collected should be given to Distribution Licensee in the area of
supply.
 In case of multiple distribution licensees, amount should be given to
Licensee from whom the consumer was availing supply.
 Additional Surcharge
Objectives and Principles
1. To compensate the Licensee towards loss of purchasing power in case
Licensee is unable to sell that power.
2. It is not intended to recover other fixed cost of Licensee.
3. In case of supply shortage situation, there will be no loss to licensee and
hence may be specified as zero.
4. The obligation is on the Licensee to prove that its power purchase
commitments have become stranded.
 Transmission & Wheeling Charges
 Determination of transmission charges
 CERC method – long term & short term
 May be possible in CTU network where system designed for beneficiaries &
capacity is contracted
 Is that feasible in State grid under retail competition ?
 Wheeling charge:
 Wheeling means operation whereby the distribution system and associated facilities of
transmission licensee or distribution licensee as the case may be are used by another
person for the conveyance of electricity on payment of charges to be determined under
section 62.
 Distribution system means system of wires and associated facilities between the delivery
points on the transmission lines or the generating station connection and the point of
connection to the installation of consumers.
 Ie., when distribution system is associated, it is wheeling & wheeling
charges is applicable
 Distribution system is where the consumer is connected
 Why Open Access not taken off
yet...
 Non-discrimination not practiced
 No clarity in many issues
 Surcharge
 Additional surcharge
 Lender of last resort
 Differentiation on transmission charges/ wheeling
charges / distribution charges (voltage level or
license level ?)
 What constitutes ??
 Issues on Open Access
Recent phenomenon in power exchanges has
provided some new issues that are getting
increasingly prominent and need to be solved
as soon as possible for continuous function of
Open Access.
1.State Restriction in Open access transactions when
there is Supply Surplus or Supply Deficit.
2.Frequent Change between Market(Open Access)
and Discom(Default Service provider)
 State Restriction in Open access transactions

 Often times it has been seen that many State

Government use their power bestowed upon
them by section 11 of Electricity act,2003 Which
state that,
“The Appropriate Government may specify that a
generating company shall, in extraordinary
circumstances operate and maintain any
generating station in accordance with the
directions of that Government.”
 Frequent Change between Market(Open Access) and
Discom(Default Service provider)
Large consumer’s are gaming the system by using open access
tariff in off-peak hours and using power from discoms in peak
hours thereby gaining profits from both ends.
 This behaviour creates large volatility in the discoms load and
make forecasting the load a lot difficult.
 Sometimes this also lead to stranded capacity. Which requires
more additional surcharge.
 Adverse effect on Non - open access consumers (small
consumers) who ultimately bears the cost which is resulted
from stranded capacity through discoms.
 Disparity of Cross subsidy charge and subsidized tariff

 Cross Subsidy Surcharges create pervasive

incentive
 Ideally if cross subsidies are more, incentive for the
consumer to go out of the system is high
 Because of the presence of surcharge, incentive for
going out will be dampened
 So it is fundamental to lower the cross subsidy
charges to increase the competitiveness of
Open Access.
 The role of Electricity Regulator
 Applying policy revision which would prevent
the state government from blocking “Open
Access”
 Finding Solutions for Large consumer’s
profiteering behaviour and how best to penalise
it.
 Finding ways to provide small consumers the
benefit of Open Access. And thereby helping
 What needs to be done
 Unbundled rates
 Transmission
 Distribution – wires / supply function / customer
service – billing metering etc.,
 Transparency in billing
 Showing all rates applicable for the services
 Power, network charges, consumer charges, cross
subsidy etc.,
 No Commissions are attempting CoS study
 Presence of a pool
 All generators to sell to the pool, all
buyers/licensees to buy from the pool based on
schedules
 Single buyer model can be used as a pool
arrangement
 Single buyer to be neutral – just facilitating the
transactions only
 Choice for supply from market or Open Access