Fear of revenue loss dissuades discoms from providing open accessSanjay Jog / Mumbai Apr 30, 2012, 00:50 IST
A power ministry directive last week to the Central Electricity Regulatory Commission (CERC) has once again exposed the reluctance of Maharashtra’s power distribution companies to provide open access to consumers of electricity in the category of 1 megawatt and above.
Discoms, which are currently reeling under an acute financial crisis, fear a big revenue loss. For, it is the industry consumers who subsidise agriculture consumers and those with power demand up to 100 units. This situation my force the government to increase subsidy. All the same, its possibility is remote because the government finances itself are in a precarious condition.
Discoms, thus, believe they will lose the freedom to negotiate tariff and terms with existing supplier or switch to alternate supplier. A situation where all 1-Mw-and-above consumers are suddenly forced to seek power through open access would, according to discoms, gift them with uncertainty in terms of recovery of cost of long-term procurement of power.
The Power ministry, which exercised powers under Section 107 of the Electricity Act, 2003, has asked the CERC to take steps in framing of appropriate regulations to implement provision of open access.
The commission, in its reply, has told the power ministry that the issues pertaining to open access for consumers under Section 42 of the Act, are under the jurisdiction of the state electricity regulatory commissions (SERCs).
According to MahaVitaran official, discoms should be relieved from providing hot standby power in the event of a breakdown.
A senior official of the Maharashtra State Electricity Distribution Company (MahaVitaran) says SERCs need to calculate a cross-subsidy surcharge based on the assumptions that the power available as a result of exit of open access consumer would be sold at the average revenue realisation rate.
“The consumer needs to pay cross-subsidy charges which are varying from 18 paise in the case of Assam to Rs 1.30 in the case of Andhra Pradesh,” he reveals.
“A number of states like Maharashtra and Punjab have earlier arrived at cross-subsidy charges as zero, but later on they recalculated and increased them to 94 paise in the case of Maharashtra and Rs 1 in the case of Punjab.”
Indian Energy Exchange says the power ministry’s directive would lend relief to the retail consumers, as the cost of procurement will come down. “This will result in bringing down the tariff,” according to Jayant Deo, its MD and CEO. To him, the fears expressed by discoms are unfounded. Deo says cross-subsidy surcharge and other surcharges will compensate them with any losses on account of migration of open access consumers.
Power analyst D Radhakrishna says all consumers above 1 Mw of power consumption are today eligible to source power at a competitive rates. However, consumers are wary that approaching market may lead to hostile treatment from local distribution companies.
Also, in the case of a line breakdown and transformer failures, the requirement of power supplies would be adversely affected although all regulators have defined and laid codes like the Standard of Performance. “But they would be treated as alien consumers,” he notes. “They may not get uniform treatment.”
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