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CERTIFICATE
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DECLARATION
I, Akash sharma , Roll No 08 student of MBA (POWER MANAGEMENT) 2012-14 batch
of the National Power Training Institute, Faridabad hereby declare that the Summer Training
Report entitled -“Open Access & Interstate short term open access implications (case
study of Haryana) ” is an original work and the same has not been submitted to any other
Institute for the award of any other degree.
A Seminar presentation of the Training Report was made on September 04, 2012 and
the suggestions as approved by the faculty were duly incorporated.
Countersigned
Director/Principal of the Institute
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ACKNOWLEDGEMENT
To acknowledge here, all those who have been a helping hand in completing this project,
shall be an endeavour in itself.
Nevertheless with all due regards and respect to the contributions made by various persons at
each stage of the project, I take this as an opportunity to thank all those who have been
instrumental in completion of my project “Open access & Interstate short Term open
Access Implications (case study of Haryana)”.
I first thank my Project Convener Mr Dipanshu Gupta ,Senior manager , Global Energy
Pvt. Ltd.who gave me this opportunity to work on a project of such vast dimensions.I also
thank Mr. Niraj Kumar, Manager, VP, Global energy Pvt. Ltd.
For his constant support & encouragement. The extent of clarity of thought that a person
should have while performing his duties is what I think that I imbibe from him. I am indebted
to my project guide Mrs. Manju Mam, Director, NPTI Faridabad who was keen with me
in developing this project. Her continuous support both in technical and moral terms led me
to pave the way through the challenges faced during the arduous course of this task.
I also thank Mr S K Chaudhary, Principal Director NPTI, Mr J.S.S. Rao and Intern Co-
ordinator Ms Manju Mam, for their support and guidance throughout this project. A special
acknowledgement to my friend Himanshu and my seniors who helped me as and when
required.
Akash Sharma
Summer Interns
NPTI, Faridabad
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EXECUTIVE SUMMARY
The Electricity Act 2003 has already brought forth numerous changes in the electricity sector.
Enactment or the implementation of the act is now one of the greatest tasks lying ahead of
those well wishers of this industry. One of the greatest achievements of this over haul in the
power industry can be considered – is the freedom to buy and the freedom to sell the
electricity.
As mentioned above the freedom to buy and sell electricity thereby creating or tending
towards a perfect market in this sector, which was previously almost a monopoly market run
and maintained by State Electricity Boards, is now widely opened up for a greater private
participation. Trading is now considered as a distinct activity. Open access thus finds its own
niche in supporting this activity. Open Access – an issue already discussed and debated in
lots of arena still remains completely unresolved.
Open access always was or is the first step into a free and strong, open and unified power
market throughout the world. It allows the generator with an excess capacity to sell and take
part in the trading of electricity. Central Transmission Utility and State transmission Utilities
are obliged to allow their facilities for this purpose .Thus the timing of allotment, charges to
be taken from users, amount of capacity to be allotted are all major issues which need a quick
attention by the regulators. Also some of the issues like cross subsidy, extent of subsidy,
method of calculation of surcharge etc are to be addressed by the quasi judiciary entities.
Thus the issues to be addressed in this report could be of immense importance in the
perspective of an advanced market in the future. Thus they should be given proper
importance by the DERC and the concerned authorities.
In this report a detailed study of the Open Access Regulations issued by CERC and various
SERCs are carried out. Also the detailed procedure laid out for Grant of Connectivity, Long-
term Access and Medium-term Open Access by the CTU is being studied.
As a student of MBA in Power Management from National Power Training Institute,
Faridabad, I got an opportunity to do my summer internship program in GE which lasted for
8 weeks during which I was assigned a project and I had to work in a team for completion of
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the project. My project included preparation of draft regulations for Grant of Connectivity
and Inter-State Open Access.
LIST OF ACRONYMS
MSEDCL Maharashtra State Electricity Distribution Company Limited
LT Low Tension
HT High Tension
Programme
MW Mega Watt
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NDMC New Delhi Munciple Corporation
UI Unscheduled Interchange
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LIST OF FIGURES
Figure 1 : Research methodology ..................................................................................................... 18
Figure 2: Conceptualization of the project ....................................................................................... 18
Figure 3: SECTIONS OF THE ACT GOVERNING OPEN ACCESS ............................................................ 20
Figure 4: CATEGORIES OF OPEN ACCESS .......................................................................................... 28
Figure 5: DIRECTION FOR PRICING REFORMS ................................................................................... 62
Figure 6: CAPACITY BUILDING AT SLDC & UTILITIES .......................................................................... 64
LIST OF Tables
Table 1: COMPARISON OF SECTOR STRUCTURE ............................................................................... 57
Table 2: COMPARISON OF PHASING AND ELIGIBILITY OF OPEN ACCESS ........................................... 58
Table 3: COMPARISON OF TRANSMISSION PRICING ......................................................................... 59
Table 4: COMPARISON OF TREATMENT OF TRANSMISSION LOSSES ................................................. 59
Table 5: Websites ............................................................................................................................ 71
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TABLE OF CONTENTS
Contents
CERTIFICATE ..................................................................................................................... 2
DECLARATION .................................................................................................................. 3
ACKNOWLEDGEMENT .................................................................................................... 4
EXECUTIVE SUMMARY ................................................................................................... 5
LIST OF ACRONYMS ........................................................................................................ 6
LIST OF FIGURES ............................................................................................................. 9
LIST OF Tables .................................................................................................................. 9
1 About the organization .................................................................................................. 12
2 Services offered :- ........................................................................................................ 13
3. Objective of the Project.................................................................................................. 16
4. Significance of the Project ............................................................................................. 17
5 Research methodology ..................................................................................................... 17
6. Introduction to Open Access ......................................................................................... 19
6.1. Provisions of EA, 2003 in the context of Open Access............................................ 22
6.2. Mandates of the State Commission (Delhi Electricity Regulatory Commission) ... 24
6.3. Need for Open Access .............................................................................................. 26
6.4. Categorization of open access customers: .............................................................. 27
7. Application procedure for Open Access ........................................................................ 28
8. Main Elements of Open Access ...................................................................................... 29
8.1. Capacity Assessment ............................................................................................... 29
8.2. Allocation of Network Capacity .............................................................................. 32
8.3. Curtailment Priority ................................................................................................ 33
8.4. Under-Utilization/Non-Utilization of Open Access capacity .................................. 33
9. Pricing for Open Access ................................................................................................. 34
9.1. Objective of Pricing Policy as followed by DERC .................................................... 34
9.2. Pricing for Network Usage ...................................................................................... 35
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10. Charges for Open Access Customers ........................................................................... 39
10.1. Transmission Charges ........................................................................................... 39
10.2. Scheduling and System Operation Charges .......................................................... 42
10.3. Wheeling Charges.................................................................................................. 43
10.4. Cross-Subsidy Surcharge ...................................................................................... 44
10.5. Additional Surcharge ............................................................................................ 49
10.6. Imbalance Charges ................................................................................................ 50
10.7. Reactive Energy Charges....................................................................................... 51
10.8. Transmission Losses ............................................................................................. 51
10.9. Distribution Losses ............................................................................................... 52
11. Information System ..................................................................................................... 52
12. International Experience in Open Access ................................................................... 54
13. Challenges Ahead to Implement Open Access ............................................................ 60
14. Recommendations ....................................................................................................... 67
15. Conclusion ................................................................................................................... 69
16. Limitations of the Project ............................................................................................ 70
17. Bibliography ................................................................................................................ 71
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1 ABOUT THE ORGANIZATION
Established in 1994, Global Energy Private Limited is an ISO 9001:2008 certified
Energy Company like no other, which is committed towards honouring the trust
invested in it by its clients, by providing uninterrupted power supply and
commitments made to its employees by delivering them a steady growth path. It is
committed to achieving success in accordance with the company’s high business
ethics and values with a focus on green and renewable energy. Every member of
GEPL has imbibed this commitment and purpose.
Global Energy Private Limited focus is to efficiently operate its renewable facilities in
order to provide its customers with a reliable, low-cost source of power. It is an
ISO9001:2008 Certified Company for generation of Power from Agro waste.
As a power trader, Global Energy supports their esteemed clients with data driven
power market analysis to help them get best returns. Global Energy has till date,
transacted almost 3 billion units of Energy .Global Specializes in renewable energy
trading, especially wind and Hydro. Apart from this, it understand the dynamics of the
various energy markets and its goal is to maintain effective relationships with
stakeholders by using this extensive knowledge to benefit our clients through our
advisory services.
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2 SERVICES OFFERED :-
Power Trading Services
Power Trading powered by analytics directed towards equitable growth. Global Energy
Private Limited (GEPL) is engaged in the business of power trading and is focused on
providing hassle-free energy transactions for its clients with all regulatory and strategic
support for a quick, effective, single-window clearance. GEPL has outlined the critical
differences between pure power trading and energy production: GEPL does not trade energy
on a speculative basis, but supports its esteemed clients with a data driven power market
analysis to help clients get the best returns.
So far, GEPL has traded ~3 Billion Units of electricity and besides trading thermal power,
GEPL is among the country’s biggest traders in green energy, especially from Hydro and
Wind.
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Non Renewable power continues to form the backbone of our country. Global Energy has
been active in power trading of all types of power including that generated from fossil fuel.
its power trading spans across power trading in coal, gas and liquid fired power plants.
Global warming is a huge issue and therefore cannot be ignored in the wake of burgeoning
consumption of energy. The governments across the world have laid down strict regulations
in this regard. Global Energy as a company has been working towards establishing a strong
business model in power generation with non renewable resources thus making them eco
compliant and profitable.
Power Generation
Generating energy through renewable sources for a cleaner and greener tomorrow.
GEPL‟s energy generation unit is focused on producing reliable and affordable electricity on
a long-term, sustainable basis. GEPL maintains a low-risk, environmentally friendly
portfolio of assets. Its focus is to efficiently operate its renewable facilities in order to
provide our customers with a reliable, low-cost source of power.
Since the Company‟s inception, it has been a responsible operator of its unit/s and a proud
contributor to the communities where it works and lives; it is geared to meeting the climate
challenge and achieving a sustainable future which includes secure, reliable, and affordable
electricity for India currently and in future.
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Bio-mass based Power generation
ENERGY GENERATION
Global Energy has been tirelessly working towards honouring its
commitment towards meeting the energy needs of the country.GE constantly ideate and
evolve it selves to make way for uninterrupted flow of power at the most economical price
possible which is fundamental for a growing economy like India. GE innovate relentlessly
towards establishing renewable energy as the preferred energy resource to meet our ever
increasing needs and therefore collaborate with agencies across the world to bring the very
latest in technology in clean energy. Global Energy is an ISO 9001:2008 certified company for
generation of power from agro waste.
Global energy’s contribution towards the above effort lies in helping our
clients build
Their RE Certificates sales portfolio at the optimum price range through:
Renewable Energy Certificate
Verified Emission Reduction Certificates, and
Certified Emission Reduction Certificates
Power Advisory -
GE shares its knowledge and expertise in the energy sector for a brighter future.
it understands the dynamics of the various energy markets and goal is to maintain
effective relationships with stakeholders by using this extensive knowledge to benefit its
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clients.
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To understand the proceedings of regulatory commission in respect of processing of
ARR filings of generation, transmission and distribution companies, public hearing of
ARR petitions and other related aspects of the commission.
5 Research methodology
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Figure 1 : Research methodology
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6. Introduction to Open Access
The objective of this assignment is to develop a framework for providing non-discriminatory
open access to the transmission and distribution system in the NCT of Delhi. In order to achieve
the desired objective, there is a need to take a holistic view on the subject, which should
encompass the legal framework, technical, commercial and financial aspects related to the same.
The condition of power sector in Delhi would also need to be considered in order to develop an
overall framework for the implementation of open access in the state.
This section reviews the legal framework existing in Delhi, along with the various provisions of
the EA 2003 to understand the legal boundaries within which the regulations would need to be
developed.
“According to the Act….”
The Electricity Act 2003 brought in significant changes in the power sector by enabling
competition, mandating open access to transmission and distribution networks, recognizing
trading and supply as a licensed activity, and delicensing generation.
Open Access, as per EA 2003, is defined under Section 2 (47) as follows:
“Open Access means the non-discriminatory provision for the use of transmission lines or
distribution system or associated facilities with such lines or system by any licensee or
consumer or a person engaged in generation in accordance with the regulations specified by
the Appropriate Commission”
To interpret it in a more understandable way the above can be put as follows:
Enabling of non-discriminatory sale/ purchase of electric power/energy between two parties
utilizing the system of an in- between (third party), and not blocking it on unreasonable grounds.
• Entitlement of the users to use transmission & distribution network of the licensees.
• Licensees maintaining these networks cannot refuse such usage merely because such system
belongs to him.
• Differential treatment of unequals is not discrimination if such unequals are clearly identifiable
as a separate class and there are justifiable reasons for separating them.
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• Use of the transmission system can be classified and conditions of the open access can be
structured differently.
• Thus, classification can be made between the existing and new users and, long term, medium
term and short term users, continuous and seasonal users, peak and non-peak hour users and
distribution licensees.
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To ensure the 'last mile' access to consumer, Sections 42 (2) through 42 (4) stipulate the duties of
distribution licensees in providing open access to their networks.
(1) 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 utilized 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 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:
Provided also that the State Commission shall, not later than five years from the date of
commencement of the Electricity 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.
(2) Where any person, whose premises are situated within the area of supply of a distribution
licensee, (not being a local authority engaged in the business of distribution of electricity before
the appointed date) requires a supply of electricity from a generating company or any licensee
other than such distribution licensee, such person may, by notice, require the distribution
licensee for wheeling such electricity in accordance with regulations made by the State
Commission and the duties of the distribution licensee with respect to such supply shall be of a
common carrier providing non-discriminatory open access.
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(3) Where the State Commission permits a consumer or class of consumers to receive supply of
electricity from a person other than the distribution licensee of his area of supply, such consumer
shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by
the State Commission, to meet the fixed cost of such distribution licensee arising out of his
obligation to supply.
(CTU), State Transmission Utilities (STUs) and the Transmission licensees, and distribution
system of the distribution licensees on a non- discriminatory basis (ref: sections 38, 39 and 40).
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The Captive Generating Plants including group captives shall have open access for conveyance
of electricity from the place of generation to the place of their own use by the person or persons
who had established the Captive Generating Plant. Open Access to the Transmission and
Distribution System shall be available to the Captive Generating Plants from the effective date of
the EA 2003 i.e. 10th June 2003 as provided in sections 9 and 42, subject to the availability of
adequate transmission capacity and absence of operational constraints in the distribution system.
The availability of the transmission capacity shall be determined by the CTU or the STU
concerned and in case of any dispute as to availability, the same shall be adjudicated by the
Appropriate Commission (Ref: Section 9).
access in the Transmission and Distribution System (Ref: sections 38,39, 40 and 42); The Captive
Generating Plants will pay the transmission and wheeling charges for availing open access.
Phases for introduction of open access to be decided by the Appropriate State Commission
under section 42 – such phases shall be designed in a manner that all consumers with the
connected load of one megawatt and above shall be allowed open access not later than five years
from the coming into force of the amendment in section 42, effective from January 2004;
Payment of surcharge if such open access is to be allowed before the elimination of cross
subsidies
A consumer permitted by the commission to receive supply from a person other than the
distribution licensee of his area shall be liable to pay an additional surcharge on the charges of
wheeling to meet the fixed cost of the distribution licensee arising out of his obligation to supply.
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As can be seen from above, the EA 2003 recognizes the availability of transmission capacity and
absence of operational constraints in the distribution system as the preconditions for allowing
open access in the transmission and distribution systems. The EA 2003 also provides for gradual
phasing out of cross subsidy prevalent in the system. In the event open access is sought before the
cross subsidies are reduced and eliminated as per the scheme to be framed by the State
Commission, the consumer to whom the electricity is supplied will pay the surcharge to meet the
current level of cross subsidy to the concerned distribution licensee.
Oversee and allow non-discriminatory open access in the Transmission System to Licensees,
Generating companies and also to captive generating plants.
Develop a phased plan for introducing open access in the Distribution System over a period
and the scheme to be decided by the State Commission.
Develop a phased program for reduction and elimination of cross subsidies and tariff
rationalization of every class of consumers paying for the cost of supply.
Determine the transmission charges, wheeling charges, surcharge, additional surcharge and
system operation and service charges (including Unscheduled Interchange (UI) charges, State
Load Dispatch Centre (SLDC) charges) for open access and specify the manner and utilization of
the surcharge.
Be guided by the National Tariff Policy of Central Government and principles and
guidelines used by the Central Electricity Regulatory Commission for determination of tariffs for
generators and transmission licensees.
Adjudicate upon disputes relating to availability of capacity, quality of electricity and safe,
secure and integrated operation of the State grid or related to compliance of instructions given by
the SLDC.
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Each one of the aspects mentioned above has implications on the others and there is a need to
take a holistic view. There are really two streams under which the above aspects need to be
considered. First stream is the progressive reduction and eventual elimination of cross subsidies,
which also involve dealing with related issues of determining the cost of supply, and prevalent
cross subsidy surcharge. The second stream relates to the introduction of open access, decision on
transmission capacity and operational constraints.
The regulations in this regard would have to be framed keeping the following broad principles in
mind:
Maintenance of a balance between the conflicting interests of the existing incumbent players
and the consumers.
Flexible so as to allow for correction based on the lessons from implementation of the initial
stages.
Applicability across different kinds of consumers, varying loads and different tenures.
Allow for an easy transition from the currently used methodology for charges to an open
access pricing methodology.
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6.3. Need for Open Access
2. To introduce competition
3. Regulation
The rationale for open access principle is primarily based on the following benefits that are
expected to accrue:
Optimum utilization of the network and efficiency gains through increased system
strengthening investments;
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Sale of surplus Captive capacity to third parties to improve the availability and reliability of
supply and reduce unmet demand as well as maximize capacity utilization.
Provide licensees the freedom to source power from alternative sources in a competitive
manner and the generating entity to choose its own buyer with the requisite credit rating. This
would, in turn, help in mitigating business and credit risks.
Increased competition leading to efficient operation and thereby reduced tariffs and better
quality of power in the state.
(1) The open access customers may be classified into the following categories:
(a) Long-term access customer: A long-term open access customer is one who avails open
access for a period of 12 years to 25 years.
(b) Medium-term open access customer: A medium-term open access customer is one who
avails open access for a period of 3 months to 3 years.
(c) Short-term open access customer: A short-term open access customer is one who avails
open access for a period of one month and below.
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Figure 4: CATEGORIES OF OPEN ACCESS
(2) The long-term customer shall be eligible to renew the open access on the expiry of his
Agreement, provided that the customer submits a written request at least six months prior to such
expiry, mentioning the period for which extension is required.
(3) Medium-term and Short-term open access customers shall not be entitled to any overriding
preference for renewal of the term
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In respect of long-term and medium-term customers, the State Transmission Utility shall submit a
detailed procedure for grant of connectivity, long-term access and medium-term open access.
Augmentation of transmission system shall be carried out for Long-term access customers while
medium-term and short-term open access shall be granted only if the resulting power flow can be
adjusted in the existing transmission system.
Capacity determination
Allocation of Capacity
Other issues
The aim of capacity assessment is to understand the extent of surplus capacity available on the
network that can be used to provide open access, without impacting the existing users, reserve
capacities and redundancy requirements to meet emergency conditions. In case there is limited
network capacity available, plan for timely augmentation in view of growth in demand and
addition in generation capacity of the network would need to be identified so that open access can
be provided to those who are seeking the same as per the EA 2003.
In this regard, the following aspects need to be addressed:
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Approach to Network Capacity Assessment and network capacity augmentation
Operational Aspects
Curtailment
If capacity were defined as point-to-point, then specific points of injection and drawl would
become important for assessment of capacity available in the system. Internationally, both
network service as well as point-to-point service is provided by transmission service providers.
Network service would be preferred as it would provide more flexibility to the players and would
in any case be required as the systems move towards dynamic markets. Such a service would
require the transmission and distribution system to be robust with adequate reserve margins and
systems and processes to provide it. Based on the current situation of network capacity and
constrained investments, in the interim, it would be preferable that the system be tested based on
limited flexibility on the injection and drawl, i.e. a point-to-point approach. For the long-term, in
view of encouraging the trading business, planning would be required to ensure availability of
network service.
For the present, it is felt that the optimum approach would be the assessment of Available
Network Capacity (ANC) based on point-to-point basis specified on point of injection and point
of drawl. ANC would provide the information about the available transfer capacity of the
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transmission / distribution line in a certain direction without violating the security constraints. It
would essentially measure the transfer capability remaining in the physical network for further
commercial activity, over and above already committed uses (less the ―existing load‖ for the
applicant if already a consumer). Any new load of an existing open access customer would be
treated at par for allocation of network capacity as a new open access customer.
Computation of ANC would need to be assessed keeping the following issues in mind:
Existing users and therefore the capacity utilized over seasons, peak and off-peak periods.
Reserved capacity – that has been reserved but is currently unutilized on account of delays in
commissioning of end-user equipments, lack of funds, policy directives or otherwise etc.
Growth expected in the load.
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customer alone, until the dedicated facility is offered for use by other participants of the T&D
system, in which case then the costs can be shared between the users of the dedicated facility in
proportion to their capacity reserved.
The increased reliability to be provided under Open access would require that integrated system
planning be undertaken by STU, concerned Distribution Licensees and SLDC with intimation to
the Commission so that smooth implementation and cost recovery can take place.
Allotment Priority
The allocation of network capacity would be contingent on the categorization of open access
customers, which in itself can be based on a variety of factors as outlined below:
Nature of customer
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Tenure - Long-term, Medium-term and Short-term
Quantum reserved
When, because of constraints or otherwise, it becomes necessary to curtail the open access
service of the customers, subject to the requirements of Grid Code, the short term open access
customers shall be curtailed first, followed by the medium term open access customers and long
term access customers. The open access to a distribution licensee shall be the last to be curtailed.
In case, a Long-Term Access customer is unable to utilize the capacity allotted to him, he shall
inform the same to State Transmission Utility along with reasons for his inability to utilize the
capacity and may request for surrender of the capacity allotted to him by serving a notice of 1
year, after which the relevant capacity would be deemed to have been surrendered. The State
Transmission Utility may reduce or cancel the allotted capacity of an open access customer on
account of under utilization after providing appropriate notice. The penalty payable for such
reduction or cancellation or surrendering of capacity shall be equivalent to 66% of the
transmission charges paid by such customer for the period falling short of notice period of 1 year
and 66% of the transmission charges for the period falling short of 12 years if long term access
was not availed for at least 12 years based on average billing of respective open access charges
for the past three months.
In case, medium term open access customer is unable to utilize the reserved capacity allotted to
him, he shall inform the nodal agency along with the reasons for his inability to utilize the
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capacity and may request for surrender of the capacity allotted to him by serving a notice of 30
days, after which the relevant capacity would be deemed to have been surrendered. The Nodal
Agency may reduce or cancel the allotted capacity of an open access customer on account of
under utilization after providing appropriate notice. The medium-term open access customer
relinquishing its rights shall pay applicable transmission charges for the period of relinquishment
or 30 days whichever is lesser.
In case, Short-term open access customer is unable to utilize the reserved capacity allotted to him,
he shall inform the Nodal Agency with a copy to distribution licensee along with reasons for his
inability to utilize the capacity and may surrender the reserved capacity. The State Load Despatch
Centre may reduce or cancel the reserved capacity of a short-term open access customer on
account of underutilization after providing appropriate notice under intimation to distribution
licensee. A short term Open Access customer, whose capacity has been reduced or cancelled or
surrendered, shall bear the open access charges and operation charges based on the original
reserved capacity for a period of two days from the date of receipt of request or the period of
reservation surrendered or reduced or cancelled, as the case may be, whichever period is
shorter.
The Pricing policy that has been followed by DERC, took following points into consideration:
Give economic signals for new investments and for demand side management including
location of new generation capacities and loads;
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9.2. Pricing for Network Usage
It is important to ensure that all the costs are recovered through the proposed method of charging
the transmission / wheeling charges and other components, even stranded costs, if any, resulting
from open access. All these costs need to be recovered so that the financial viability of the
successor entities is established in the transition period. The tariff revolves around the following
three aspects:
1. Elements of tariff
3. Cost concepts
1. Elements of tariff– It would be segregated based on the nature of the costs (Fixed / variable),
different sources (Network / Connection) or basis of allocation (Congestion). The various
elements of the tariff are discussed in detail below.
2. Cost allocation Criteria: Tariff design- The tariff design should encourage efficient usage of
assets, optimum investments and location of generating stations, loads, competition and power
trading. The design accordingly aims at optimal use of system through allocation of costs based
on the impact on the system. A number of methods are available for this purpose ranging from
the simple Postage Stamp method to complex MW-mile method. The principle would be to
allocate the costs based on the usage by the user / beneficiary and the related losses. In view of
the nature of electricity, capturing these two aspects needs a large amount of reliable data
capturing infrastructure and complex systems.
Some of the key methods used for transmission systems have been discussed by CERC in
formulating the regulations on open access for Inter-state transactions and are briefly presented
below.
(A) POSTAGE STAMP METHOD– Under this method, the total costs to be covered are
distributed amongst the total energy or capacity carried by the system, resulting in a fixed charge
per unit of energy transmitted or capacity reserved regardless of the distance that the energy
travels. This charge can be calculated for defined areas or zones. These rates can also be
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differentiated based on seasons and time of day. In the event when a transaction requires energy
to be transmitted across a number of zones, the transmission charges are equal to the summation
of such charges for each zones crossed – such a phenomenon is termed as ―Pan caking‖. Some
of the variations on this method are given below:
(A-1) Regional postage stamp method - The annual transmission costs calculated for each
identified region are shared based on capacity handled by the region, which includes the allocated
central generating stations’ capacity to different states, bilateral exchanges as well as capacity
brought in through trading.
(A-2) Incremental postage stamp method – This method envisages reducing the area within a
postage stamp so as to make the charges sensitive to distances exceeding 100 kms. The proposal
is to demarcate the country into squares of 100km x 100 km and the charges payable by the open
access customer are determined by counting the squares vertically and horizontally from the
source to sink of the transaction. However, this method would not reflect the actual usage of the
network by a transaction especially in case of transmission by displacement.
(A-3) Zonal postage stamp matrix Method – This is an improvised version of incremental
postage stamp method being suggested, in which the country is demarcated into 14 zones, each
represented by one or more States. Stamps between various zones are counted not only by the
physical distance but also by taking into consideration the mode of transmission (i.e. actual flow
or displacement). Based on the existing network and flow patterns, a matrix of stamps between
various zones based on notional distances has been suggested. The notional distance aims to
capture the existing flow pattern and impact of incremental flow due to open access transaction.
This method, thus, tries to replicate the results obtainable from the MW-mile method, without
going into complexities of the latter. This matrix would need to be revised based on asset addition
as well as energy flows.
(B) CONTRACT PATH METHOD– In this method, the charges payable by the user are related
to the transmission path of the transaction. For this purpose, contracted path is defined as the
shortest route formed by a series of transmission lines (as agreed between the participants) which
are capable of carrying the contracted power between point of drawl and the point of injection.
This method however, requires clear identification of the contracted path. While it is simple and
sensitive to distance, it would not reflect the true picture unless based on path as chosen by load
flow studies that would capture aspects like transmission taking place in displacement mode and
probability of using parallel paths. While this method has been widely used in the USA, it has
been felt that it is not really cost reflective and is vulnerable to gaming.
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(C) MW-Mile method – In this method the transmission rates explicitly reflect the cost of
transmission, based on both the megawatts of power flow and the distance between the receipt
and delivery points. The cost of transmission per megawatt-mile is the total transmission costs
averaged over megawatt miles of usage. MW-mile is a sophisticated and scientifically analytical
method. This method involves load flow analysis to model power flows on the transmission
network to determine charges and hence requires complete network data to be captured.
The above methods are primarily used for transmission systems for limited players and require
extensive information. Application of the same principles would be difficult to implement
across the congested and concentrated distribution networks, which would need to be
addressed through simpler principle.
3. Cost concepts– These would be the cost being used for allocating.
The two concepts in this regard are (i) Average Costs and (ii) Marginal Costs
Average Costs – Under this method, the costs incurred are shared amongst the various users on
a specified basis (as discussed above) and do not reflect the current costs. The users are treated
equally - E.g., if the transmission costs are shared based on capacity reserved, two users with a
reservation of 100 MW would be allocated the same costs. Similarly, two users drawing the same
energy would be allocated the same amount of losses;
Marginal costs – Under this method, each user is charged based on the impact that they make
on the network, be it the requirement of assets or the losses incurred. While the losses can be
computed based on the incremental losses on account of a new addition, for costs recovery, the
concept used for assets are determined based on replacement value / current costs of assets
required. While marginal pricing reflects the market based price, internationally, it has been
experienced that this mode of pricing has not been fully able to recover the costs and has forced
the regulators to have a mix of marginal pricing and fixed pricing so as to ensure investments into
the sector. Under such an event, the unrecovered costs (net of amount collected with marginal
pricing) are shared between the users on a uniform basis (Capacity / Energy).
The key charges that need to be determined by the Commission fall in the following categories,
subject to the National Tariff Policy and principles and methodologies used by DERC for Open
Access Customers:
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Prior to the formulation of Intra State Open Access Regulations in Delhi, the Central Commission
(CERC) has provided its Order and Regulations on ―Open Access in Inter-state Transmission‖
used the following principles in pricing:
Elements of Tariff: The charges have been segregated into Transmission Charges (for long-
term, medium-term and Short-term), SLDC Charges, UI Charges, Bidding for Congestion,
Reactive Energy Charges and Losses.
Cost Allocation and Cost Concepts: The allocation of costs has been based on an
―average‖ principle rather than the ―marginal‖ implying that all the costs are uniformly shared
between a set of users irrespective of the impact that each additional user / transaction has on the
system. Such a method is being proposed, as it is not currently practicable to measure the
―marginal‖ impact of each transaction on the costs and the losses of the transmission system.
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calculated for each inter-regional link, other inter-state transmission licensees separately.
-
state transactions. However, any UI on account of embedded customers shall form a part of the
State Bill, to whose system the embedded customer is connected.
Losses would be averaged across all users and would be paid in kind by additional injection.
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Under the existing regime, the transmission charge is designed so as to recover all the costs of the
CTU, in proportion of the reserved capacity of the long-term users. At the State level, the State
Commission allows for recovery of the costs from the Consumers.
Costs to be recovered
These charges are for the actual usage of the transmission and the distribution system for
transferring the contracted power from the generator to the user. Accordingly all costs associated
with the transmission or sub-transmission and distribution system may be recovered from the
licensees/consumers availing network service. These charges are expected to cover all the costs
for creating and operating the network including O&M, interest expenses, depreciation and equity
returns. The different costs can be segregated into:
Connection Charges – for recovery of costs for assets used for interconnection to the grid.
As these costs are fixed in nature, the charges are generally fixed, typically allocated based on
capacity reserved. However, the quantum of these charges can differ, depending on the funding of
these assets. In case these assets have been funded by the users themselves through a capital
contribution, these charges would cover only the expenses for operation and maintenance of these
assets, else they would cover all the usual fixed expenses towards O&M, interest expenses,
depreciation, return on equity, etc.
Use of System Charges – for recovery of costs for using the transmission and distribution
network for reaching the power to the recipient unit.
Congestion Price – pricing to reflect the overloading of the network and the costs related
with it. Congestion pricing / peak pricing is used to encourage the efficient usage of the assets as
well as to foster investment in new lines. Congestion results in some of the customers not being
able to access the contracted power and therefore forced to purchase more expensive power
through a non-congested link.
The increased cost is the cost of congestion and therefore needs to be charged to those who are
causing it. Some of the methods used for congestion pricing include (i) Nodal pricing, wherein
the congestion price reflects the difference between generation price at the two ends of the
congestion, thereby pricing the congestion at the cost of the replacement power requirement and
(ii) sharing the additional costs on account of buying more expensive power that have to be borne
(in proportion of energy drawal) by participants on account of the congestion. Such computation
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would need to define ―Congestion‖ and segregate costs associated with the same. Another
surrogate to be used could be that the loss incurred by users is priced at the ―marginal cost of
power‖ and divided among the users causing the congestion.
In case of multiple transmission licensees, the costs of each licensee would be taken into account
to compute the various charges applicable for using the licensee’s system.
Allocation of Costs
The costs computed above can be allocated to the various users based on the following:
Connection Costs – As these costs are related only to the specific users connected to this
equipment, these are typically allocated based on the capacity reserved by each user and are fixed
in nature
Use of System Charges - Various methods are available for allocating these costs
Congestion Price – As these costs are incurred on account of the users of the congested leg,
these are allocated to the users causing the congestion. The allocation is typically not fixed and is
charged only for the periods of congestion and can be based on capacity reserved or energy
drawl.
As per DERC regulation, the open access consumer has to pay Transmission charges payable to
State Transmission Utility/ transmission licensee for usage of their system, and shall be as
determined as under:
The long-term and medium-term open access customers shall share the annual transmission
service charge of the STU or transmission licensee on a monthly basis in accordance with the
following formula:
Transmission Charges = ATSC/ (ACs X 12) (in Rs./MW-Month)
Where,
ATSC = Annual Transmission Service Charges determined by the Commission for the State
Transmission System for the year
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ACs = Sum of the capacities allocated to all long-term and medium-term open access customers
in MW.
The transmission charges payable by the long-term and medium-term open access customers for
the use of transmission system for a part of the month shall be determined as under:
Transmission Charges = ATSC/ (ACs X 365) (in Rs. /MW-Day)
Where,
ATSC = Annual Transmission Service Charges determined by the Commission for the State
Transmission System for the year
ACs = Sum of the capacities allocated to all long-term and medium-term open access customers
in MW.
The short-term open access customers shall pay one-fourth of the transmission charges
applicable to the Long-term / Medium-term Customers. 25% of the charges collected from the
Short Term Open Access customer shall be retained by the Transmission Licensee and the
balance 75% shall be adjusted towards reduction in the transmission service charges payable by
the Beneficiaries.
Scheduling and Operation charges include fees for scheduling and system operation, fees
for affecting revision in the schedule on bonafide grounds, and collection and disbursement
charges.
Short-term customers shall pay scheduling and system operation charges to be notified by the
commission after determination of ARR. In Delhi, a composite operating charge @ Rs.2,000/- per day
or part of the day shall be payable by a short-term open access customer for each transaction to the
SLDC or as determined by the Commission from time to time.
Scheduling and system operation charges shall also be payable by a generating company or
a licensee when allowed accesses under these Regulations.
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10.3. Wheeling Charges
Under the EA 2003, charges for the use of the distribution system are to be recovered through the
wheeling charges. The wheeling charges is sought to cover not just the network cost but also need
to factor for administration charges and operation & maintenance charges as well. The basic
elements remain similar to the transmission charges.
Wheeling means the operation whereby the distribution system and associated facilities of a
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.
The wheeling charges should reflect the costs incurred by the distribution licensee to supply
electricity to consumers including the cost of infrastructure.
Hence, when open access is used by a consumer, he is liable to pay wheeling charges (may
include transmission charges bundled in it.)
Wheeling charges payable by the open access customers for the usage of distribution system shall
be as determined by the Commission in the tariff order of the distribution licensee.
Transmission and wheeling charges as determined shall be payable, on monthly basis, by the
open access customers based on the capacity booked or actually utilized maximum capacity
whichever is higher. The regulation also specifies where a dedicated transmission system and/or a
distribution system used for open access has been constructed for exclusive use of an open access
customer, the transmission charges or wheeling charges for such dedicated system shall be
worked out by transmission and/or distribution licensee for their respective systems and got
approved by the Commission and shall be borne entirely by such open access customer till such
time the surplus capacity is allotted and used for by other persons or purposes.
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In case intra-state transmission system and/or distribution system is used by an open access
customer in addition to inter-state transmission system, transmission charges and wheeling
charges as fixed and approved by the Commission shall be payable for use of intra-state system in
addition to payment of transmission charges for inter-state transmission.
Policy Provisions
Cross Subsidy Surcharge should not be so onerous that it eliminates competition which is
intended through Open Access
It should not constraint introduction of competition
Cross Subsidy Surcharge to be computed as difference between the tariff applicable to the
relevant category of consumers and the cost of distribution licensee to supply electricity to the
consumers of the applicable class.
Cross Subsidy Mechanism as per NTP
S = T - [C (1+ L / 100) + D],
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Where,
S is the surcharge
T is the Tariff payable by the relevant category of consumers;
C is the weighted average cost of power purchase of top 5% at the margin excluding renewable
power and liquid fuel based generation
D is the Wheeling charge
L is the system loss for the applicable voltage level, expressed as a %age
Various methods of surcharge (as recommended by FOR)
Various methods to calculate surcharge as recommended by FOR (Forum of Regulators) are as
follows:-
• Simplest method
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• Easy to understand
• Easy to calculate
Disadvantages:
• Discourages open access since generation is not available at such low price at which it can be
implemented.
The second method that was discussed was taking the difference between the average realization
and the consumer category-wise/voltage-wise cost of supply (embedded cost). Even though this
method is an improvement over the average cost method, it results in high level of surcharge.
This would imply that competitive rates of generation at which open access can be implemented
have to be very low, which again does not seem to be a reality. The net result would be that the
method would not encourage open access.
Surcharge = average realization from a consumer category – consumer category wise /
voltage wise cost of supply
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Advantages:
• Improvement over average cost method as it recognizes the fact that losses and costs are
different for L.T, H.T and E.H.T customer
• Easy to calculate.
Disadvantages:
• To make this method feasible, competitive rates of generation at which open access is
implemented have to be very low and this is very difficult.
2. The marginal cost of purchase of electricity is to be equaled to the highest power purchase cost
of the utility including fixed and variable cost.
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It was agreed that surcharge calculated by this method is not revenue neutral and will adversely
impact the licensee financials. The group observed that surcharge in this method could be
negative also.
Surcharge = average realization from a consumer category – Marginal cost of supply
Disadvantages
• We have several concerns with the use of MUC to calculate the surcharge. First, MUC do not
represent avoidable costs. Generally, the fixed costs of the marginal unit are not avoidable. If the
licensee’s load is reduced because of the departure of some customers, at best the licensee will
avoid the highest variable cost of either its own plants or the plants from which it purchases
power. In those cases where the marginal unit for a utility may be an unplanned purchase from a
surplus area or the unallocated portion of a Central Generating Station (CGS), the utility may be
able to avoid both the fixed and variable costs of the contract.
• The second reason why it is inappropriate to use MUC to calculate the surcharge is that this
assumes that for any utility, there is a single generating unit that is on the margin at all times, and
that is not so. The generating unit on the margin changes with the time of day and season. During
peak periods, peaking units with very high variable costs are on the margin while during off-peak
periods, base load units with very low variable costs may be on the margin, etc.. Thus generally
the most expensive unit would be the one that operates only at the times of the system peak (and
hence would have a low PLF) and applying that cost to all the 8760 hours 3 of the year would
lead to a gross overstatement of the avoidable costs.
• The third problem with the use of MUC to calculate the surcharge is that the highest cost unit is
not applicable to the entire decrement of load. The use of a single unit (the highest cost unit) to
represent avoidable costs for the entire load that would go out due to open access is likely to be
incorrect. As an example, consider that 1000MW of industrial load is expected to leave the
licensee and get electricity from alternative suppliers. If the capacity of the highest cost
generating resource is only 200 MW, then clearly it would be incorrect to assume that the costs
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per kWh of the 200 MW unit would be applicable to the entire 1000 MW load block. The
avoidable costs for the remaining 800 MW would be lower. Therefore, the size of the decrement
of load for calculating the avoidable costs must match the expected decrement in load due to open
access. The avoidable cost would then be the weighted average of the costs of the generating
units that would no longer be required.
(a) As a first step, the projected capacity that is likely to move away due to open access will be
estimated.
(b) Since, it will avoid purchase of power from marginal source of supply, the weighted marginal
cost of power purchase (variable cost) from such sources would be considered as avoided cost for
variable components of power purchase.
(c) To that avoided cost, other charges viz. applicable fixed charges of power purchase, and
applicable transmission and wheeling charge will be added to arrive at cost of supply.
(d) The difference between the average realization of a category and the avoided cost of supply,
discussed above, shall provide the cross subsidy surcharge amount.
- Additional Surcharge should not be so onerous that it eliminates competition which is intended
through Open Access
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National Tariff Policy
- There is an unavoidable obligation and incidence to bear fixed costs consequent to a Contract
- Fixed Costs related to network assets would be recovered through Wheeling Charges
Objectives and Principles
- To compensate the Licensee towards loss of purchasing power in case Licensee is unable to sell
that power
- In case of supply shortage situation, there will be no loss to licensee and hence may be specified
as zero
- The obligation is on the Licensee to prove that its power purchase commitments have become
stranded
from a person other than the distribution Licensee of his area of supply, shall pay to the
distribution Licensee an additional surcharge on the charges of wheeling, in addition to wheeling
charges and cross-subsidy surcharge, to meet out the fixed cost of such distribution Licensee
arising out of his obligation to supply. The Commission shall scrutinize the statement of
calculation of fixed cost submitted by the distribution licensee and obtain objections, if any, from
the open access customer and determine the amount of additional surcharge.
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The mismatch between the scheduled and the actual drawl/ scheduled and the actual
injection at the interface points may be met from the grid, which shall be governed by UI pricing
mechanism. However the tariff payable by the open access customers to the licensee may contain
a component of incentive to be decided by the Commission.
A composite UI bill for the State as a whole shall be issued by the RLDC, the segregation
of which shall be done at the state level by the SLDC for the UI charges payable by the open
access customers.
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10.9. Distribution Losses
The losses in the distribution system would cover the electricity lost in the system on account of
technical losses and non-technical losses such as theft, pilferage, improper metering, wrong meter
reading, etc. in the network. At the aggregate level, these losses are computed based on the
difference between the energy injected into the distribution system and the total billing (metered
plus assessed consumption) to the consumers.
Unlike the transmission losses, the determination and allocation of distribution losses is far more
complex as the network is far more integrated. While the desired objective is to allocate losses, it
is much more difficult to segregate the losses based on usage as a sizeable portion of the
consumption is not being metered. Since it is not known whether the commercial losses are due to
a specific class of customers, it may be necessary to allocate the commercial losses across all
consumers. Under the arrangement relating to open access where an existing customer has sought
an open access, given that the extent of losses cannot be determined towards any specific
customer, there is one argument to state that it may be necessary to allocate these losses to such
customers as well.
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(a) Name of customer;
(b) Period of open access granted (date of commencement and date of termination);
A status report on the current short term open access customers indicating:
(b) Period of open access granted (date of commencement and date of termination);
(b) Period of open access granted (date of commencement and date of termination);
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(c) Schedule of open access period for each day.
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Twin objectives of promoting competition and open access have been efficiency
improvements and price reductions;
A precursor to introduction of open access has typically been the setting up of independent
regulator;
A phased approach to Open Access has been followed in most of the countries with
competition being introduced first to large users followed by retail competition. While various
parameters have been used to phase the open access, typical factors used have been consumption,
area and voltage connectivity;
Most countries have begun with ―simple, easy to understand and implement‖ systems and
have gradually moved/ are moving towards more complicated and sophisticated systems;
More often than not, except in the state of New York, there has existed a common
methodology for the introduction and phasing of open access within a country;
In most countries, the system operator has been identified as a separate and distinct entity;
even in cases where the transmission utility itself serves as the system operator, this particular
role of the transmission utility has been separately identified and defined as distinct from its role
as a transmission service provider;
Most countries have in some form or the other tried to bring in restrictions on cross-
ownership between generation and transmission/ distribution so as to ensure competition and a
fair open access market;
Transmission pricing has typically been subject to regulation and prices are mostly based on
a mix of marginal pricing and average pricing to ensure complete recovery of costs.
Some key issues for concern typically have been:
Availability of detailed cost and revenue related data from the sector entities;
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Confusion on issues relating to funding of new transmission capacity investments and
unclear identification of the beneficiaries;
In some countries, while the aim has been to promote competition, the industry has evolved
into regionalized markets thereby limiting choices to the final consumers;
Shifting of consumers to inefficient producers due to short term inducements being offered;
Reliability of supply has also been an issue of concern due to additional generation not
materializing to the extent expected.
A comparative picture of the introduction and operation of ―Open Access‖ in a few countries is
presented in the following tables. The sample has been chosen in a manner so as to have a mix of
different systems, representation of developed as well as developing countries etc. Accordingly
the review below covers England / Wales, New York, Australia, Victoria, New Zealand,
Argentina and Chile.
The comparison has reviewed key aspects of the Open Access in these systems including:
Transmission Pricing
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Table 1: COMPARISON OF SECTOR STRUCTURE
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Table 2: COMPARISON OF PHASING AND ELIGIBILITY OF OPEN ACCESS
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Table 3: COMPARISON OF TRANSMISSION PRICING
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13. Challenges Ahead to Implement Open Access
Issues/Constraints:
Due to skewed tariffs, industrial consumers are paying higher tariffs as compared to their
counterparts in developed countries. Many buyers have shown keen interest in purchasing power
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from other sources. However, no significant merchant capacity in the country, and Bilateral Trade
and Power Exchange transactions essentially limited to Licensees/state utilities.
iffs will bring about rudimentary demand side response in the market.
-caking.
-subsidies.
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Figure 5: DIRECTION FOR PRICING REFORMS
Segregation of transmission and trading: assessment of present
situation
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and frustrate efforts at non discriminatory Open Access.
Independent functioning of SLDCs
Reporting requirements could be in line with the reporting pattern for State Electoral Officer
under Election Commission.
RLDCs to ensure recovery of not only operating and capital servicing costs but also generation of
adequate surplus to provide equity for future investments. Same to be adopted by SERCs for
SLDCs.
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organisation structure and necessary incentives for attracting qualified personnel in load Despatch
Centres, endorsed.
Standby charges
By levying retail tariff as applicable for respective consumer categories only for the period
during which such standby support is requested.
No fixed demand charges should be levied on open access consumer during the period when
no standby support is availed:
The charges for Standby power support should comprise only energy charge.
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The demand charge for six weeks may be uniformly spread across the year.
Beyond duration of six weeks, the open access consumer will have to avail regular supply
from concerned distribution license
Metering, billing, balancing and settlement mechanism
block.
The cross-subsidy surcharge needs to be calculated as per the formula given in the Tariff
Policy unless there are valid reasons for deviation.
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(2) The Appropriate Commission may offset the adverse financial impact of the directions
referred to in sub-section (1) on any generating company in such manner as it considers
appropriate.”
Karnataka and Tamil Nadu have issued orders under Section 11 of the Act requiring
generators to sell power only within the state at a specified rate and denying open access.
State of Karnataka has, in fact, passed generator specific orders in terms of which they have
specified the price at which generators can sell power to distribution utilities.
The States of Andhra Pradesh, Rajasthan and Maharashtra have also imposed restrictions on
the right to open access.
Effects
Requiring private generators to compulsorily sell power to state distribution utilities and not
to other third parties;
Fixing the price at which power can be sold through executive diktat;
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14. Recommendations
Central and State ERCs should be advised by the appropriate governments to comply with
the statutory requirements relating to open access in a time bound manner. In particular, they
must prescribe the open access surcharge in accordance with the provisions of the Tariff Policy
notified by the Central Government under Sec. 3 of the Act.
The State Governments should advise the SERCs to specify the temporary connection
charges to be charged by the Discom for providing standby supply in accordance with paragraph
8.5.6 of the Tariff Policy.
The state authorities should be advised to permit free sale of electricity and not compel
generators to sell electricity to the SEB/Discom in the state except where a power purchase
agreement exists.
State Governments and States’ ERCs should be suitably advised to enable operationalisation
of open access to promote a healthy development of the market where private investment can be
attracted. Where the State Governments or the respective SERCs do not conform to the Act or the
Tariff Policy there under, the State Governments should be advised and the matter be discussed in
the appropriate inter- and intra-State forum of Power Secretaries/Ministers.
To enable competing suppliers to use the distribution network on a level playing field, the
tariff for distribution companies should clearly specify the energy charges and wheeling charges
separately. It is, therefore, recommended that the SERCs should be advised to specify wheeling
charges and energy charges separately in conformity with section 42 read with section 62 of the
Act.
State Governments should be advised to set up SLDCs as independent entities with financial
and operational autonomy.
SLDCs should be upgraded in a time-bound manner to enable open access under section 42.
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SERCs should ensure other enabling arrangements such as standby supplies at affordable
prices, metering and settlement.
IPPs, captive and small generators should be allowed to bring power into the market without
any hindrance in grant of open access.
Regulators should meet with the bulk consumers and other stakeholders to address their
concerns with a view to operationalising the scheme of open access as provided in the Act.
Consumer education and pro-active action by Regulators, both at the Centre and in the
States, is considered vital for encouraging open access to consumers.
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15. Conclusion
Making the distribution segment of the power industry efficient and solvent is the key to success
of power sector reforms. Implementation of open access in distribution is one of the main
solutions. Open access in distribution will create a competitive environment. Therefore, standard
of service will rise and consumer will get better supply and service.
However, there are some roadblocks in the successful implementation of open access in distribution in
India.
Distribution companies and utilities are not taking open access in distribution very
positively. They are having so many apprehensions about implementation of open access.
Charges for the open access levied by different SERCs are variable in nature.
Apart from few states, many states are still incorporating and facing problem of cross
subsidy surcharge which finally increases the net cost of power from open access.
Net cost of power from open access is more as compared to the tariff which discourages the
buyers and sellers.
SERC’s are using different methodologies for the calculation of surcharge as per their
convenience in spite of the instructions in National Tariff Policy 2005 which gives the common
formula for calculation of surcharge.
Distribution companies in India are not financially very sound and Distribution network in
India is not strong.
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16. Limitations of the Project
First of all the time duration of 8 weeks was a major constraint in going through the project
completely.
Data collected through the internet has not been sufficient to provide all the answers to the
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17. Bibliography
List of Documents:
Delhi Electricity Regulatory Commission (Terms and Conditions for Open
Access) Regulations, 2005.
Table 5: Websites
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