The Hindu Business Line : CERC's `Open Access' system may not bring immediate changes

THE Central Electricity Regulatory Commission's (CERC) order to operationalise the "Open Access" transmission system enshrined in the new Electricity Act 2003, is unlikely to bring with it immediate changes in the way that the power business has operated in the country.

Transmission lines are like inter-state highways carrying power from one state to another. "Open Access" in the transmission business means that if there is spare capacity, any applicant should be given access to the highway on a non-discriminatory basis.

Till the new Act was enacted, the limitation was that the earlier laws did not prevent the inter-state transmitter of power, Power Grid Corporation of India Ltd, from turning down an applicant who sought to transfer power interstate and therefore use PGCIL's lines.

The CERC is the nodal body under Section 38 of the Electricity Act 2003, to implement `Open Access'.

How is `Open Access' going to change the power business?

Not very much in the short run. The problem is that the transmission provider, PGCIL, has very little capacity to spare. "We have very little transmission capacity to spare. May be in the southern region and north-western region, there is some capacity. So, the system is not `open' to long-term contracts for transfer of power," a senior PGCIL official told Business Line.

The existing short-term trade of power across regions, conducted primarily by Power Trading Corporation (PTC), will now get a legal basis on the tariff charged for wheeling of power since, under the new law, the regulator sets a tariff for such transaction. PTC trades about 1 per cent of the total power produced in the country.

"This will definitely improve the bankability of the transactions," a senior PTC official said.

From the point of view of distribution companies such as BSES Ltd, they can go ahead and plan generation capacities catering to their distribution zones on the back of new transmission capacities.

"There will be no risk on generation capacity utilisation since allocation of transmission capacity to transfer power is done upfront and in a transparent manner. This, since the transmission company will require to inform the regulator about the spare capacity planned in the new capacities," a senior distribution company official said.

There still remains the issue of a State allowing a distribution company to step out of its contract to buy power from a designated State transmission company or power generator. The State may withhold such permission to enable cross subsidy of certain sectors in the state. In such a case, the State-owned transmission company would sell power to the distribution company at a cost well above its power purchase costs and wheeling charges.

Under the Electricity Act, 2003, "Open Access" is required to be implemented by April next year. Till such time that the norms are put in place, the earlier law of the land will prevail.

"Till date, no transaction has been restricted due to the non-implementation of `Open Access'. The implementation only removes any risk of non-implementation," a senior CERC official said.

The CERC order mentions the methodology and procedure for seeking `Open Access' in inter-State transmission.

It has created two categories of consumers - short-term and long-term. The short-term consumer will be constrained in the event of transmission constraint.

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