The Centre is planning to reduce the powers of the states to restrict open access in inter-state transmission of electricity. It is considering an amendment to the Electricity Act, 2003 to curb an emergency provision being used by states to clip the ability of power generating companies to sell electricity outside the states. The power ministry has sought the law ministry?s view on the amendment.
Power minister Sushil Kumar Shinde said at a seminar the amendment would allow independent power producers (private and public sector) to sell power at prices they can negotiate with consumers through the open access system. This will remove the scope of intervention by the state governments.
Girish Pradhan, additional secretary in the power ministry told FE, ?States are allowed to use the provisions under Section 11 (of the Electricity Act) only in situations like natural calamities and emergencies?. Scarcity of power, due to heavy load in summer months, does not qualify as an emergency, officials feel.
The Centre is concerned that indiscriminate use by states of the emergency provision, whenever they face a shortage, could cripple the development of the power trading business.
At present, power trading in the country takes place through two power trading exchanges ?Indian Energy Exchange (IEX) and Power Exchange India (PXI). As per June data, IEX has traded nearly 15 million units daily and about 478 million units in the month, while PXI?s monthly trading hovers between 35 and 40 million units, implying a daily trading volume of 2 million units. Currently, the power on these exchanges is priced at Rs 9 per unit applied for northern region, while the price is Rs 5 per unit for western, southern and eastern regions.
Incidentally, the third power exchange promoted by NTPC, NHPC, PFC and TCS that has been recently cleared by the Central Electricity Regulatory Commission, plans to start its operation from December. The planned amendment by the power ministry will also ensure that bilateral deals between the generators and utilities remain unaffected. Section 11 gives authority to state governments to direct a power company to sell its entire surplus power to the state grid, thereby effectively curbing the flow of power outside the state.
States such as Rajasthan, Karnataka and Tamil Nadu have recently invoked the Section as they faced scarcity. This had affected the implementation of bilateral contracts already in place between the generators and utilities and also impacted power trading through exchanges.
Shinde met the state power ministers on June 23 to arrive at a solution.
According to him, effective operationalisation of open access is crucial for opening up consumer choice as well as for the health of the trading function introduced as a distinct activity under the Act. Incidentally, 23 state electricity regulatory commissions have issued open access regulations.
Industry sources argued that the open access would facilitate desired market signal for investment, induce improved service from the existing utilities and enable consumers to get power from any source of their choice.