Pursuing An Open Option

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Better Choice: Open access allows consumers to choose whom to buy power from (Pic by Amit Verma) It may be rather late in the day for the UPA government to take policy decisions, but the task force on open access has made some important recommendations to operationalise this important measure enshrined in the electricity law. The specially constituted task force on &lsquo;Operationalising Open Access in the Power Sector&rsquo; under the chairmanship of B.K. Chaturvedi, member of the Planning Commission, has asked the Centre to take a proactive role and set aside a certain portion of power generated by central power undertakings only for open access. An important measure introduced in the Electricity Act (2003), which replaced the Electricity (Supply) Act of 1948, was the concept of open access. The idea is to allow consumers to choose from where and from whom to buy power. This is a deviation from the earlier laws that required power projects located in states to sell only to the state-owned electricity boards, which in turn sold to consumers. All states are supposed to operationalise the open-access law and related polices by 2009. However, the ground reality is far from this. The task force in its final report released a few weeks ago said, &ldquo;...till date, no consumer in any state has availed of open access under Section 42 of the Act so far...&rdquo; and that &ldquo;...in many states the provisions of the Act have not been operationalised so far&rdquo;. If anything, &ldquo;...this facility has been availed of only by captive producers and that too marginally&rdquo;. Last week, the chairman of Central Electricity Regulatory Commission, Pramod Deo, said: &ldquo;The mindset has not changed and we are really back to where we had started before the enactment of the Electricity Act.&rdquo; Why this reluctance? For a consumer to avail of open access, he has to pay a particular surcharge to the state utility he resides in. This surcharge goes towards compensating the state utility (or existing supplier) for the loss of a consumer to a different supplier. Apart from this surcharge, there are wheeling and transmission charges that also need to be added for availing open access. Now, this surcharge cannot be so high that the consumer (or supplier) has no incentive to avail of open access. However, while 21 states have notified for open access, in almost all states, the methodology for calculation of surcharge is in variation with the central tariff policy implemented in 2006. More importantly, says the task force in its report, open access has not been operationalised because states generally prevent export of power to other states on the pretext of having no surplus transmission capacity and because no state wants cheaper power to go outside the state. Here is an irony. While open access is not operationalised, states with surplus power are selling power through the trading route. While the issue of trading is separate, Chaturvedi told BW that he has written to Prime Minister Manmohan Singh last week recommending that the Centre should set aside a certain portion of power from its central power plants (NTPC, NHPC, etc.) for open access. The Centre gets a 15 per cent discretionary share from these plants. From this share from existing plants, he said, 3 per cent should be set aside for open access only. For new plants, this share should be hiked to 7 per cent. It is a fact that this government cannot act on this recommendation. It will now be up to the new government to take this forward. But if open access has to start, a beginning has to be made somewhere. (Businessworld Issue Dated 24-30 March 2009)