Open access challenges

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Open access challenges way forward

• S.K. Chatterjee
• Deputy Chief (RA),CERC
• 7th August, 2009

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In this presentation..

• Open Access Status
• Challenges in Implementation of Open Access
• Way Forward

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Open access Status
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Short term Inter-State Open Access
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Status of Open Access at Distribution Level
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Comparison of cost of power through Intra-State
Open Access and Distribution Utility -
Illustrative Cases for a typical 5MW at 11kv/33kv
consumer
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Comparison of cost of power through Intra-State
Open Access and Distribution Utility -
Illustrative Cases
Tariff for an embedded consumer of 5MW at 11 KV
(33 KV in some cases). Effective Open Access
Charges for consumer of 5MW at 11 KV (33 KV in
some cases) in addition with a assumption of
power purchase cost of 4 Rs./KwH.
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OPEN ACCESS CHARGES

• Transmission Charges
• Wheeling Charges
• Imbalance (UI) Charges
• Reactive Energy Charges
• Surcharge
• Interconnection Charges
• Operating Charges ( SLDC charges)
• Connectivity Charges..etc.

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STATUS OF OPEN ACCESS IN DISTRIBUTION(As on
31.06.2009)

• Total OA Applications received 230
• OA Capacity Applied for 22905.35 MW
• Total OA Applications approved 163 (71)
• OA Capacity Approved 19933.33 MW(87)
• OA Transaction Implemented 6343.73 MW (28)

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OPEN ACCESS Challenges AND way forward
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CHALLENGES IN OPEN ACCESS

• Segregation/Unbundling of transmission and
  trading.
• Independent functioning and capacity building of
  SLDCs.
• Issues of standby charges.
• Open Access Charges and Cross Subsidy Surcharge
• Adequate metering, billing, balancing and
  settlement mechanism
• Resistance of incumbent licensees / Role of SLDCs
• State Governments issuing orders under Sec 11

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WAY FORWARDIN Open Access
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SEGREGATION OF TRANSMISSION AND TRADING
ASSESSMENT OF PRESENT SITUATION

• EA 2003 debars transmission companies from
  trading to
• bring about neutrality in transmission business
  and
• make discoms responsible for planning and
  procurement of power
• SEBs have been reorganized in several States but
  not in true spirit
• TRANSCOs, divested of trading responsibilities
  but another trading arm created to perpetuate
  single buyer model.
• In many States a holding company continues to
  oversee the subsidiaries created for transmission
  (controlling SLDCs) , distribution, trading etc.
• The conflict of interest sought to be removed
  through the provision of law continues to haunt
  and frustrate efforts at non discriminatory Open
  Access.
• Major Role of State Govt. for overcoming these
  constraints

Way Forward.
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INDEPENDENT FUNCTIONING OF SLDCs (FOR
Recommendations)

• SLDC not to report to transmission or trading
  licensee.
• Reporting requirements could be lines of
  reporting pattern for State Electoral Officer
  under Election Commission.
• Operation of SLDC an appropriate reporting
  system
• in terms of administrative control and recording
  of confidential remarks
• with STU - as a subsidiary of transmission
  utility as stop-gap arrangement
• by a separate entity as soon as possible
• Urgent need of delegation of financial powers to
  SLDCs . CERC to make regulations for 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.
• State Governments be advised to phase out single
  buyer model

Way Forward.
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CAPACITY BUILDING OF SLDCs (FOR
Recommendations)

• Requirement of deploying personnel with certain
  pre-defined minimum qualifications and
  certification of competence in Load Despatch
  Centres to be incorporated in the Grid Code
• A model scheme for technological upgradation of
  SLDCs recommended.
• Recommendations of the Committee constituted by
  MoP regarding staffing pattern, organisation
  structure and necessary incentives for attracting
  qualified personnel in Load Despatch Centres,
  endorsed.

Way Forward.
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STANDBY CHARGES (FOR Recommendations)

• Standby arrangement for open access consumers
• 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.
• 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

Way Forward.
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METERING, BILLING, BALANCING AND SETTLEMENT
MECHANISM (FOR Recommendations based on
internal TF report)

• All open access schedules must be specified in
  MW (not in energy terms).
• All open access customers should have meters
  which record energy for each 15-minute time
  block.
• All Special Energy Meters for intra-State
  entities should be installed by the State
  Transmission Utility.
• Uniform mechanism for settlement on lines of
  inter-state scheme preferable. However, SERCs
  may adopt alternative mechanisms.

Way Forward.
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CROSS SUBSIDY SURCHARGE (FOR Recommendations)

• The cross-subsidy surcharge needs to be
  calculated as per the formula given in the Tariff
  Policy unless there are valid reasons for
  deviation.
• Note Chhattisgarh ERC has adopted average cost
  method by recording reasons as follows
  Agricultural consumers and the BPL consumers in
  the State are highly subsidized as compared to
  the industrial and commercial consumers who are
  cross-subsidizing them. The formula in the Tariff
  Policy thus does not reflect the real position
  and hence has not been adopted by the
  Commission.

Way Forward.
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CERC Orders on Denial of Open Access
Way Forward.
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Case I

• In the matter of non approval of Open Access
  communicated by Southern Regional Load Despatch
  Centre on ground of non- receipt of consent from
  SLDC-OPTCL for transmission of power generated by
  Nava Bharat Ventures Ltd through M/s. Reliance
  Energy Trading Ltd, to the distribution utilities
  in Andhra Pradesh

• Commissions observations
• There is no transmission constraint or congestion
  as accepted by Orissa State Load Despatch Centre.
• The requirements of procuring and erecting PLCC
  and other communication equipment have already
  been complied with by the petitioner.
• Neither Orissa Grid Code nor the Orissa State
  Electricity Regulatory Commission orders put any
  restriction in granting open access.
• Commission did not find any justification for
  denial of open access on the ground of lack of
  facilities for real time monitoring.

Ruling
Commission directed that open access shall be
allowed as required by RETL since there are no
transmission constraints and surplus transmission
capacity is available on the intra-State
transmission system
Way Forward.
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Case II

• In the matter of petition for direction to RRVPNL
  to pass order on concurrence as per the Central
  Electricity Regulatory Commission (Open Access in
  inter-State Transmission) Regulations, 2008.

Commissions Ruling
The Commission concluded that the objections on
the basis of which open access was denied were
not germane to the issue at hand and held that
action of RRVPNL was unfair and illegal. The
Commission observed that such action appeared to
be an attempt to create a situation whereby GFL
was forced to sell its output within the State,
which was against the intent and content of the
Electricity Act, 2003.
Taking a stern view of denial of open access by
Rajasthan SLDCs, CERC issued show cause notices
to Rajasthan SLDC and Rajasthan Rajya Vidyut
Prasaran Nigam Ltd. (RRVPNL) to explain why
action should not be initiated against them for
violating the CERCs regulations on open access
in inter-State transmission. The complaint was
filed by Gujarat Flurochemicals Ltd. (GFL), a
company that owns wind generation facility in the
Jaisalmer district of Rajasthan.
Way Forward.
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Case III

• M/s Viswanath Sugar Ltd. (VSL), M/s Ugar Sugar
  Ltd. and M/s Shree Dhoodhaganga filed petition
  their petitions stating that open access was not
  granted by WRLDC.

VSL had executed a PPA initially with KPTCL to
supply power to HESCOM. As per PPA, in the event
of any payment default by HESCOM for a continuous
period of three months, VSL can sell power to
third parties. HESCOM has defaulted payment for
more than 3 months. Further, VSL entered into a
PPA Tata Power Trading Company Limited for sale
of 7.5 MW of power on round-the-clock basis and
for that Tata Power Trading sought open access
which was denied by KPTCL on ground of its
previous PPA with VSL.
Commissions Ruling
The Commission observed that as an independent
operator and statutory body under the Electricity
Act, 2003, SLDC should consider the applications
for open access in an impartial manner and in
line with provisions of Electricity Act, 2003 and
the open access regulations. Any denial of open
access on considerations other than those
prescribed under the law and taken note of in the
above analysis, will attract the penal provisions
of the Electricity Act, 2003.
Way Forward.
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State govt. orders under section 11 of EA 2003
Way Forward.
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Section 11 of Electricity Act

• 11. Directions to generating companies.-
• (1) The Appropriate Government may specify that
  a generating company shall, in extraordinary
  circumstances, operate and maintain any
  generating station in accordance with the
  directions of the Government.
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• Explanation.- For the purpose of this section,
  the expression extraordinary circumstances mean
  circumstances arising out of threat to security
  of State, Public order or natural calamity or
  such other circumstances arising in the public
  order or natural calamity or such other
  circumstances arising in the public interest.
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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,

Way Forward.
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Orders under sec 11

• 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

Way Forward.
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Effects

• requiring private generators to compulsorily sell
  power to state distribution utilities and not
  other third parties
• fixing the price at which power can be sold
  through executive diktat
• imposing restrictions on the right of third party
  sale and
• denial of open access.

Orders issued under Section 11 are subjudice
Way Forward.
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THANK you