Fast action on the power ministry’s pressure to allow open access to bulk consumers isn’t practical, for both technical and economic reasons, says the Maharashtra Electricity Regulatory Commission (MERC).
It had earlier initiated proceedings on the matter but, after a strong representation to go slow from the Maharashtra State Electricity Distribution Company, better known as MahaVitaran, has agreed with the latter’s stand.
In an order issued last Thursday, MERC said it had decided to set up a committee on the subject, to report within a year. The panel would comprise representatives of distribution licensees and other experts.
MERC chairman V P Raja told Business Standard: “The committee will study the technical, operational and commercial constraints in the context of implementation of open access, carry out scenario analysis of revenue loss on various discoms in Maharashtra and the corresponding tariff (rate) increases required to mitigate the same. Besides, the committee will recommend a road map for implementation of open access as visioned in the power minister’s letter issued in November last year.”
In the country, at a limited level, said Raja, a wholesale power market had been established but a retail market was yet to take shape.
In Maharashtra, he said, barely 2,000 consumers contribute two-thirds of MahaVitaran’s revenue. Their money cross-subsidises the power supplied at lower rates to agricultural consumers. The latter contribute merely three per cent of MahaVitaran’s revenue. If allowed to choose their supplier, these 2,000 consumers would go out.
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MahaViataran says it cannot afford this. In its petition to MERC, it also pointed to technical reasons for contending the power ministry’s directive would lead to immediate collapse of the grid. For, open access was always subject to availability of transmission capacity and various other parameters, to have stable grid frequency. And, MahaVitaran said, there would be a huge revenue loss with migration of bulk consumers (1 Mw and above), as they were subsidising those with less money. The effect of such a migration would be a rise in rates.
MahaVitaran argued the existing MERC Distribution Open Access Regulations, 2005, do not provide open access transactions through power exchanges. Apart from MahaVitaran, 29 others, including Reliance Industries, Tata Power, Mahindra & Mahindra, Indian Energy Exchange and Prayas Energy Group, had made representations to MERC.
The regulator’s subsequent order of last Thursday cited technical and operational constraints in implementing the power ministry’s directive on operationalising open access in Maharashtra. It said the state load dispatch centre needed the necessary technology, expertise and personnel to handle such a large number of open access requests. There should be availability of power, which has not been committed for long-term power purchase agreements or some peaking power plants as a reserve. If availability of non-bonded power does not materialise, it would distort the demand-supply equation in favour of power producers and put undue pressure on open access consumers.
More, MERC pointed to the revenue loss due to migration of high-end consumers, as they were subsidising the other buyers. The resulting uncertaiinty in power prices would also affect bulk consumers, whose long-term planning would be affected, it said.