Power ministry trips open access plan

The Union power ministry's bid to keep control over electricity allocation is the latest hurdle in the attempt by the Planning Commission to kick-start open access. Open access allows large users of power -- typically consuming 1 Mw and more -- to choose their electricity supplier.

The ministry has discretion in the allocation of 15 per cent of the overall power produced by generating utilities owned by the Centre. Earlier this year, the Plan panel had proposed that a fourth of this 15 per cent should be made available for direct sale to open access consumers.

This amount of unallocated power is generally used by the government to bridge the gap between demand and supply, when supply shortage in the state is huge. The ministry of power (MoP) has opposed the Commission.

"The ministry is saying that 15 per cent is the flexible power available to them and they will lose this flexibility," said BK Chaturvedi, member (power) in the Commission, who is heading the plan panel's task force on open access.

"Our point is that once this segment (of open access) expands and power becomes available from other pools, too, allocation of power from the government's quota can be gradually reduced," he added. Chaturvedi is now seeking higher intervention. "I am sending a note to the prime minister," he said.

The Electricity Act of 2003 has set the deadline of 27 January, 2009, for granting open access to all consumers with requirements above 1 Mw. Applications seeking open access for over 17,000 Mw have been sent till date. Actual implementation has been only 1,400 Mw, and largely for captive power, according to the latest data from the Central Electricity Regulatory Commission (CERC).

"The opposition posed by the MoP might further delay the implementation of open access, which is already being delayed by the state regulators," said another official associated with the development.

A stumbling block is the high cross-subsidy surcharge, the amount to be paid by a consumer to his existing supplier to offset the loss incurred by the latter due to the switch.

"The state regulators have fixed cross-subsidy surcharges which are so high that it becomes difficult for consumers to change their supplier," said Chaturvedi.

There are divergent views on whether setting aside some power for sale through open access is the solution.

"This is not a way out of the open access problem," said a senior official very close to the development. "The central government's quota of unallocated power is not sufficient enough to meet the existing power shortage. If we take away more power (from the quota), we are causing more hardships in the availability," he added.

There are also other questions on the usage of this power in the central pool for boosting open access. "It is natural that the MoP would not like to give away its flexibility over the 15 per cent quota. It has a specific purpose. It is meant to bridge the deficit gap in the states and not for market creation," said a senior analyst from an accounting and consultancy firm.