Open Access: Stakeholders’ Perspective
Executive Summary Introduction of open access in power sector by the Electricity Act, 2003 was aimed to bring about competition and enable consumer choice. Open access envisages non-discriminatory access to the transmission and distribution network. It enables the eligible consumers to procure power at competitive price, to meet their demand, from suppliers other than the distribution companies (Discoms) in whose license area they are situated. In furtherance of the provisions in the Act, regulatory commissions have framed regulations for implementation of open access under their own jurisdiction. Despite the regulations for open access in inter-state and intra-state transmission and distribution being in place for sufficiently long time, the growth of open access over the past few years has been limited and various issues have mushroomed. In this regard, Distribution Utilities Forum (DUF) secretariat, on behalf of the Forum, interacted with 15 stakeholders across various regions of India to capture the perspective of stakeholders and understand the challenges and opportunities associated with the implementation of open access. These stakeholders included seven Discoms, five consumer groups, two system operators, and one power exchange. The findings of these interactions along with consultation paper by Ministry of Power (MoP) and report by Forum of Regulators (FOR) formed the basis for deliberations during the fifth DUF meeting. The perspective of the stakeholders on the five issues identified by MoP, namely, tariff design and rationalization, cross-subsidy surcharge, additional surcharge, frequent switching of open access consumers, and standby charges, in their consultation paper (thereafter deliberated upon by FOR) was also gathered, during the meeting, to rank these issues depending upon their severity. The responses of the stakeholders to the survey conducted during the meeting were analyzed using analytic hierarchy process (AHP) and weighted average approach (WAA). The result of the analysis was a consolidated ranking of the issues; this would help in understanding the priority for addressing these issues. From the analysis, it emerged that tariff design and rationalization was the most severe issue and must be addressed on priority basis. This was followed by cross-subsidy surcharge, additional surcharge, frequent switching of open access consumers, and standby charges in terms of priority order. During the Forum deliberations, the stakeholders articulated various issues that impacted the implementation of open access; majority of the issues were raised by Discoms and consumers. Discoms are mostly worried about losing their high-tariff paying consumers to open access, which will have an adverse impact on their financial and operational efficiencies. Consumers are concerned about maintaining financial viability of procuring power via open access route. The perspective of the stakeholders towards implementation of open access was broadly categorized under three aspects, namely, financial, operational, and regulatory. On the financial front, both Discoms and consumers raised a number of concerns. The provisions in the Act state that charges and surcharges (constituting open access charges) can be levied upon the consumers opting for open access to meet the revenue loss from consumers moving away from the Discom supply. Discoms highlighted that the skewed tariff design has been impacting the determination of realistic open access charges. While Discoms stated that the open access charges are insufficient to compensate for the loss in revenue, consumers have raised their concerns over increasing open access charges that has made this route of power procurement economically unviable for them. Discoms suggested that the determination of open access charges, especially cross-subsidy surcharge, additional surcharge, standby charges, and waivers, must be revisited in order to ensure that these charges do not impact their financial health. Both consumers and Discoms have unanimously agreed that tariff redesign and rationalization can help in addressing most of these financial issues.
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