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THE CENTRAL ELECTRICITY Regulatory Commission allowing anyone to freely wheel electricity generated in one region to another on the transmission lines criss-crossing the country is a step forward in implementing the much-acclaimed Electricity Act, 2003. With the legislation in place, it was only to be expected that the CERC would frame the guidelines. It is not as if companies are ready to transmit power over long distances and that they were merely waiting for the rules to be formulated. The CERC move is only an enabler to large-scale power trading in the country — a concept that is yet to catch on. Till now, Power Grid Corporation of India, the designated Central transmission utility, was solely responsible for the transmission network and for wheeling power over long distances. Now, any company with a transmission licence can use this same network to transmit power from one place to another, on a non-discriminatory basis.

The Electricity Act, 2003, a landmark legislation, envisages a new category of players in the sector — power traders. This essentially gives distribution companies and even consumers, mainly the bulk users, the right to exercise their choice on who will supply electricity to them. Likewise, a generating company can decide whom it will sell power to. For this regime to become effective, non-discriminatory open access in transmission had to be ensured. The next step forward will be to frame guidelines on providing open access in distribution, as envisaged by the Act, which will then give a choice on the distribution company too.

Open access in transmission means that distribution licensees need not be tied to a single supplier but can access power from any source on payment of wheeling charges. PowerGrid and the designated transmission utilities in the States are obliged to provide open access for transferring this power. More important, open access in transmission will benefit companies with captive power plants; they can now carry the energy across the country to their own factory or office without having to pay the surcharge which the Act envisages in lieu of the cross-subsidy. But this surcharge needs to be capped and the State regulatory commissions must also clearly specify the time frame within which the cross-subsidy will be eliminated. Otherwise, the surcharge will be a deterrent to open access in transmission really taking off.

Open access in transmission is expected to result in efficient day-to-day operations of the bulk electricity market, including power trading. It is also expected to provide an economic signal for efficient use of transmission resources and for investing in transmission. There could be some problems in providing this open access as there are complexities in the pricing of energy and in interfacing with the grid. Transparency in information among market participants will also play a vital role in ensuring the success of open access.

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