Ministry tells states, regulators & discoms to implement 2003 law provision.
The Union power ministry has told all state governments, power regulators and distribution utilities to delay no more in implementing the open access provisions of the Electricity Act, 2003.
Open access, meaning freedom to choose the supplier, was being denied for consumers wanting 1 Mw or above, owing to a perceived ambiguity in the relevant provisions. The power ministry had taken the law ministry’s advice before issuing the new instruction on Tuesday.
Pramod Deo, chairman of the Central Electricity Regulatory Commission, told Business Standard: “The utilities will negotiate with all 1 Mw and above contract demand consumers for the rate at which electricity will be supplied and terms and conditions of such supply. Regulators will determine tariff for all other consumers taking into account discoms’ annual revenue requirement, minus the revenue being earned from 1 Mw and above consumers.”
Former Union power secretary RV Shahi said this would help push reforms in the distribution sector. “Denial by many of the states on the implementation of open access has delayed reforms. This is the correct interpretation of the Electricity Act. Competition is the core objective of this legislation and we should expect that at least now, the state regulators, state governments and distribution utilities will sincerely make all efforts to implement this provision, so that the desired benefits to consumers become available. This will also facilitate a better payment security mechanism for the generation companies. Of course, this will put some stress on the distribution companies, whose financial health is, as it is, in bad shape. We will have to give serious thought on how these discoms come out of the financial mess.”
Jayant Deo, managing director and CEO of Indian Energy Exchange, said: “I was making a case for open access for the past three years. This will bring more power through users, which is as contemplated in the Act.”
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The law and judiciary department said “The provisions of section 42 (3) of the Electricity Act provides that a person requiring supply for electricity has to give notice. If the consumer intends to use the network of the distribution companies, he has to give notice and upon such notice to a discom, it is duty-bound to provide non-discriminatory open access to its network. Section 42 (3) cannot be construed to mean that giving of a notice is a pre-condition for the implementation of open access.”
It said the requirement of a notice was only to communicate the open access consumer’s intention of using the discom’s network in line with the relevant regulations and not to seek its permission for doing so.