The Open Access Consumer

One of the primary objectives of the Electricity Act 2003 (henceforth called the Act) was to ­ensure competition in the electricity sector in India by having a large number of buyers and sellers of electricity. One such measure to promote competition is open access. This is the process whereby a retail consumer can seek power supply from a source other than the incum­bent utility but by using the infrastructure installed by them. The ­uti­lity provides this service for a fee called the “wheeling charge”, and in addi­tion is also entitled to a “cross­subsidy surcharge” to be paid by the ­retail consumer seeking open access. As far as the tariff is concerned, it is to be negotiated bet­ween the buyer or retail consumer and the seller – a generating company, a trader, another distribution company, etc. Through an amendment in the Act, effective from January 2004, it has been decreed that all consumers with a connected load of above one megawatt (MW) would necessarily be given the ­option of open access by January 2009.¹

The policy of open access, however, has not been a success in India for a ­variety of reasons, the main one being that the utilities do not want lucrative consu­mers to go outside their billing net. These utilities have prevailed upon the regulatory commissions to make the crosssubsidy surcharge prohibitive des­pite the guidelines issued in the tariff policy. It is not just the distribution utilities who have played spoilsport. Even the state governments have stifled open access by taking refuge under Section 11 and Section 108 of the Act and not ­allowing surplus power to flow outside the state. While Section 11 speaks of extraordinary circumstances, where a state government can give directions to a generating company, under Section 108, the state can issue policy directions to the regulatory commissions.