State regulator contests power ministry on open access

Last Updated: Sun, Sep 09, 2012 20:21 hrs

A power regulator’s movecould stop open access plans for consumers having load in excess of 1 Mw.

Contrary to the stand taken by the Union power ministry after seeking the view of the law ministry, the Madhya Pradesh Electricity Regulatory Commission (MPERC) has ruled that it has the jurisdiction to determine the rates for all consumers, including those having load in excess of 1 Mw, according to the law.

MPERC, in a judgment delivered last week, observed that consumers with loads in excess of 1 Mw need not be treated as open access consumers.

It said the obligation of the distribution licensee does not cease for consumers who avail open access. Such consumers have the option to remain with the distribution licensee. Open access consumers would always retain the right to obtain standby power from the distribution licensee.

The regulator also ruled it was not bound to follow the legal opinion of the attorney general or the power ministry in the matter.

It said it was guided only by the policy directions of the Madhya Pradesh government and by the interpretations of the Electricity Act by the competent courts.

The power ministry had on August 3 reiterated that it had the powers to direct the Central Electricity Regulatory Commission (CERC) and the Forum of Regulators (FoR) to take actions, including for framing of regulations to implement open access provisions, according to the Electricity Act, 2003.

The power ministry, in consultation with the ministry of law and justice, had issued a circular on November 30 that all 1 Mw and above consumers are deemed to be open access consumers and the regulator cannot fix charges for them.

MPERC’s counterpart in Maharashtra has scheduled a public hearing in the matter on October 16. Bihar has convened a hearing on September 29.

The Rajasthan Electricity Regulatory Commission (RERC), in an order issued on July 24, had also ruled against the power ministry’s circular. RERC said rate determination by the regulatory commission does not hamper promotion of open access.

Consumers with contract demand of 1 Mw and above have been allowed open access in Rajasthan from April 1, 2008. Rajasthan Electricity Regulatory Commission observed that the open access situation may not improve even if the regulatory commissions do not set rates.

A truly competitive market is essential for success of open access. During a shortage, RERC said, market could be exploited. The open access consumers would be hit, more so if regulatory protection in respect of supply from licensee concerned gets obliterated.

Jayant Deo, former member, Maharashtra Electricity Regulatory Commission, told Business Standard:“The scheme of Electricity Act, 2003, is to protect retail consumers through reservation of inherited capacity for them. This is done through taking out bulk consumers from the regulated tariff. The Electricity Act, 2003, provides for power to all through competitive market forces and no market can be developed so long as there is administered or regulated price.”

D Radhakrishna, power analyst, said that MPERC’s judgment was a setback for open access market. Distribution companies would continue to resist allowing open access as they fear that the industrial consumers, who are their main sources of revenue, would back out.

“Around 25,000 Mw is bought by consumers having load more than one Mw and these consumers are waiting for an appropriate arrangements on regulatory grounds so that they can buy power from the open market, particularly when power is cheaper during monsoon and lean season,” he added.

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