Regulators and Policymakers Retreat-2012 Presentation on

Operationalisation of Open Access

By

Ajoy Mehta, IAS,

Managing Director, Maharashtra State Electricity Distribution Company Limited

Date: 24th August 2012

Regulators & Policymakers Retreat, 2012

Regulators & Policymakers Retreat, 2012

Regulators & Policymakers Retreat, 2012

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Matter has raised important legal issues

Opinions of Attorney General of India, Solicitor General Of India

Planning commission- working group on OA Operationalisation in Feb-2010

Notification from Ministry of Power on Dt 30.09.2011

Discussions in the Forum of Regulators (FOR)

MoP has referred this matter for CERC to form regulations,

Comments on Operationalisation of OA has been asked by MERC

MSEDCL

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(a) Bulk consumers (above 1 MW) shall be deemed to be open access consumers w.e.f.

January 2009.

(b) The State Commission has no longer fix the energy charges to be paid by such a

consumer, but will continue to fix the wheeling charges and surcharges.

(c) Sec-49 shows that if certain consumers want to have the benefit of the option to buy

power from competing sources, then it is logical that DISCOMS/Distribution Licensees

do not have an obligation to compulsorily supply power to such consumers.

(d) Sec-42(3) is not a precondition for the implementation of open access as such a

notice is not for seeking permission to use the distribution licensee’s network, but

only to communicate the open access consumers intention of using such a network.

Ministry of Power Letter

Technical issues & Operational constraints

Financial Impact on MSEDCL.

Legal issues

Letter from MoP refers only legal issues in Open Access Operationalisation.

Opinion is in isolation with provisions in Act. ( They have not considered technical & operational Constraints.)

Deciding of OA tariff by Utility : Complex issue.

Methodology for implementation of OA is not mentioned any where.

It requires clarity/Change in regulation

CSS decided is not commensurate with migrated consumers tariff.

Infrastructure problems for new consumers.

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Particular Reguln Action by DL As per MoP Circular Remarks if MoP Circular is implemented

Application

for Open

Access

Reg.

No. 4.2

Scrutiny No Application, Just an

intimation is required

MERC (Distribution Open Access)

Regulations, 2005, needs to be

complied.

Eligibility

criterion

Reg. 3 Scrutiny of application for OA

capacity (should not be >

than CD)

Can not ascertain Open access may be granted to a non-

eligible consumer

Type of OA

Captive /

General OA

Sec. 9 /

10 of

Act

Ascertainment of applicability

of

CSS for General OA

Can not ascertain The DL may lose the legitimate revenue

in respect of cross subsidy surcharge

Grid

Connectivity

Reg. For existing consumer,

connectivity is available, but

for new consumer,

connectivity will be provided

For existing consumer,

connectivity available

For new, the consumer

has to apply

Utility has to bear cost of infrastructure

for new OA consumer

Arrears /

Dispute

Reg.

4.2.7

OA permission may be

rejected in case of non

settlement of dues

No control In case of arrears OA can not be granted

Installation of

SEM

Reg. 7 Ascertainment No clear guidelines SEM is a pre-requisite of open access,

must be complied. If SEM not installed,

proper Billing can not be done

Open Access

Permission

Will be granted Permission is not

required, Will be

deemed to be granted

SLDC has to monitor the fulfillment of all

regulatory requirements. SLDC has no

man power neither it is highly equipped

to look into all matters.

Particular Regul

n

Action by DL As per MoP

Circular

Remarks if MoP Circular is

implemented

Contract

Demand

Reduction /

Termination

Reg.

4.2.1 /

4.2.2

CD will be reduced to the extent

of OA capacity

We can’t have

any control over

its usage.

If CD not reduced, the DL has to

make provision for supply of

Contracted capacity

unnecessarily, resulting into

loss.Reg needs to be complied

Agreement Reg. 5 Will be executed between DL,

OA consumer & generator

No Agreement, will affect the

interests of both parties.Reg

needs to be complied

Joint Meter

Reading

JMR will be carried out ??? JMR needs to be carried out.

Billing Reg. 8 Billing to include wheeling

charges, CSS, Losses,standby, PF,

Who will bill OA

Consumer?

SLDC???

Reg needs to be complied

Standby

supply

Reg. 9 Will be provided at Temporary

Tariff through Agreement

??? No contract with DL, no

obligation on DL to provide

standby supply

Inter- state

open access

Will be permitted subject to

SLDC approval, generation units

to be given by SLDC/WRLDC

SLDC to

approve

Not mentioned in circular.

Over drawal Reg. 9 Will be charged at Temporary

Tariff

SLDC will charge

UI

The DL will decide tariff. Loss to

consumers in both cases.

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Details of deemed OA consumers (Contract demand above 1 MW) for FY 2011-12

Category No. of

Cons.

Sales Revenue ABR Migration of Consumers to

Open Access

Consumers below 1 MW

with MSEDCL

Mus Rs. Crs Rs./Unit % Sales Revenue ABR Sales Revenue ABR

HT & LT

Industries 1586 20,114 13,187 6.56 30% 6,034 3,956 6.56

14,08

0 9,231 6.56

HT & LT

Commercial 231 888 964 10.86 50% 444 482 10.86 444 482

10.8

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PWW 63 708 340 4.80 0% - - 708 340 4.80

Agriculture 42 329 24 0.74 0% - - 329 24 0.74

Railway 43 1,386 945 6.82 100% 1,386 945 6.82 - -

Total deemed

open access

consumers

1965 23425 15460 6.60 7864 5383 6.85 15561 10077 6.48

Total 1.94

Crs 81,835 38,135 4.66

Proportion of

deemed OA

consumers

0.01% 29% 41% 9.61

% 14.12%

19.02

% 26.43%

Impact on ARR for embedded consumers

Impact on tariff on common consumers

Impact on monthly revenue of utility.

Assumption of migration of consumers.

Fixed cost of Power procurement (Computation of additional surcharge on case to case basis)

Loss of CSS due to migration of bulk consumers.

Increase in loss of utility.

Burden of Opex/Capex on consumers of utility

1 MW and above consumers are deemed OA users

OA Category : SERC to fix wheeling charges & surcharge only

Dist. Licensee not to have service obligation

Notice is not for seeking permission to use the DL’s network but only to communicate intention of using such network

• Planning Commission has formed task force in Feb-2010

– SERC should be advised by Govt. for Operationalisation of OA & to specify wheeling charges.

– Standby charges should not exceed max.UI rate for applicable hrs plus 5% adm.charges thereon.

– SLDC/RLDC should be separate entity with functional & operational autonomy.

– Regulators should meet bulk consumers & act proactively.

– 25% of centers discretionary allocation of 15 % CPSU generating capacity may be made available for direct sale of CPSU to OA consumers.

– Amendment in Sec.62(1)(a) to make it explicit that supply of electricity by a generating company to DL includes supply through an electricity trader.

Not purchase excess energy injected

May charge temporary tariff for excess consumption.

Can charge high tariff for standby supply or may not provide stand supply.

O&M activity of consumers feeders.

Different negotiated tariff for OA consumers.

Can ask to revise CSS & wheeling charges