Wait gets longer for 1 MW and above consumers seeking open access in Maharashtra. The Maharashtra Electricity Regulatory Commission (MERC), which had initiated suo motu proceedings on issues on open access in the wake of power ministry’s communication of its operationlisation, has now decided to set up a high level committee and submit its report within a year. The committee would comprise representatives of distribution licensees and other experts.
MERC chairman VP 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 increase required to mitigate the same. Besides, the committee will recommend road map for implementation of open access as visioned in the power minister’s letter issued in November last year.” Raja informed that in the country at a limited level a wholesale power market has been established but the retail market is yet to take shape.
In case of Maharashtra, Raja said nearly 2,000 consumers consumers are contributing 65 per cent of the revenue of the state-run Maharashtra State Electricity Distribution Company (MahaVitaran) and they cross subsidize for the power supplied at lower rates to agriculture. The agriculture consumers contribute merely 3 per cent of the MahaVitaran’s revenue.These 2,000 consumers will go out by opting open access and it will impact MahaVitaran’s revenue.
MahaViataran in its submission to MERC had said that power ministry’s directive would lead to immediate collapse of grid as open access is always subjsected to availability of transmission capacity and various other parameters to have stable grid frequency. Further, MahaVitaran said there would be huge revenue loss to migration of consumers (1 MW and above) as they are subsiding for consumers with less financial potency. The effect of such migration would result in increase in tariff.
MahaViataran argued that the existing MERC Distribution Open Access regulations, 2005 do not provide open access transactions through power exchanges and it must be included in the upcoming open access regulations. Apart from MahaVitaran there are 29 others including Reliance Industries, Tata Power, Mahindra & Mahindra, Indian Energy Exchange and Prayas Energy Group had made their representations before the MERC.
MERC in its order issued on January 3 cited technical and operational constraints in the implementation of power ministry’s directives on operationalizing open access in Maharashtra. According to MERC, state load dispatch centre (SLDC) needs to have the necessary technology, expertise, manpower to handle such large number of open access requests. There should be availability of power which has not been committed for long term power purchase agreement or some peaking power plants as a spinning reserve. If availability of non bonded power does not materialize it would completely distort demand supply equation in favour of power producer and will put undue pressure on open access consumers.
Moreover, MERC said there would be revenue loss due to migration of consumers as they are subsidizing consumers for consumers needs to be recovered from remaining consumers of distribution licensees which may lead to tariff increase. In the absence of possibility of longer period transactions, the bulk consumers of power may not be able to plan their long term requirements. Until longer period transactions are materialised, the bulk consumers would have limited options and consequently would have to face the uncertainty of power prices.