Armed with the attorney-general\’s opinion that the Electricity Act makes it obligatory for power distribution companies (discoms) and bulk consumers to sign agreements for electricity purchase, the Centre has directed all states to institute mandatory open access regimes in distribution. The toughening of stand comes after similar missives to state electricity regulatory commissions last November fell on deaf ears.
Official sources said the Union power ministry recently wrote to state governments, asking them to issue directives to respective state regulators to frame regulations to ensure bulk consumers (those with load of above 1 MW ) meet their electricity requirement through the open access route only. ?When the attorney-general has given a legal opinion, no regulator can says its interpretation is different,? Union power secretary P Uma Shankar told FE.
Open access is seen as a prerequisite for promoting free market and competition in power retailing. It means a discom should allow consumers access to its distribution network for wheeling power from outside. The Electricity Act 2003 stipulates that discoms must allow open access to such bulk power consumers from January 2009. However, the attorney general clarified last November that open access is not optional but mandatory for bulk power.
According to the attorney general, all consumers with loads above 1 MW should be deemed as open access customers. They must procure their power through bilateral contracts alone as regulators have no authority to determine tariffs in such cases. However, they can decide wheeling charges, charges for standby power supply and cross-subsidisation charges. However, mandatory open access has run into serious opposition in states.
While discoms fear loss of their creamy bulk customers, customers worry they will end up paying more for securing power on their own. Regulators in Rajasthan and Punjab have put mandatory open access on hold after customers complained of arm-twisting by discoms in tariff negotiations. West Bengal has asked its regulator to ignore the Centre\’s guidelines on mandatory open access, sources said.
?While nobody is disputing the power ministry\’s interpretation of open access provisions, what creates confusion is its directive to regulators not to determine tariff for all consumers with 1 MW and above load,? said Shubhranshu Patnaik, senior director, energy consulting, Deloitte India.
The power ministry has sought intervention from state governments after it found in a review that stand taken by some state regulators is a major hurdle to implementing mandatory open access. The power ministry has also sought help of the central electricity regulatory commission (CERC). But the CERC expressed its helplessness to intervene in the matter, saying it has no jurisdiction over state regulatory commissions.