Open Access: Barriers and Enablers

3 August 2013, Goa

Shruti Bhatia, IEX

In this presentation

• Open Access present scenario

• Barriers to Open Access

• Enablers for facilitating Open Access

Status of Open Access

• Electricity Act, 2003 envisages implementation of open access for

1MW+ customers by January, 2009

• IEX is a pioneer in operationalisation of retail open access, first

transaction was in August, 2009

• Several operational and regulatory challenges have led consumers

to choose partial open access and not full open access

• Consumer maintains its supply agreement with local distribution company and leverages market for economical reasons and/or contingency power.

Increasing OA participation

0

500

1000

1500

2000

2500

58 72156

251411

756924

1063

1237

1609

1804

2080

2286

9 23110

357

606702

804 873954

10591149

1334

1530

1812

1989

Members+Clients Open access consumers

No.

of P

artic

ipan

ts

IEX Data as on 30th June, 2013

State-wise Open Access Consumers at IEX(As on 30th June 2013)

Andhra Pradesh

Tamil Nadu

Punjab

Gujarat

Haryana

Rajasthan

Uttarakhand

Karnataka

Madhya Pradesh

Kerala

Arunach

al Pradesh

Maharash

tra

Others

0

100

200

300

400

500

600

700

597

499

303

226

146121

40 26 11 8 4 3 5

No.

of O

pen

Acce

ss C

onsu

mer

s

State-wise OA Consumers at IEXToday almost 2000 plus consumers are availing OA through IEX

State-wise Participation at IEX

State Generators Consumers

Jammu & Kashmir 3 0

Himachal Pradesh 3 1

Punjab 2 303

Haryana 1 146

Uttarakhand 1 40

Rajasthan 13 121

Madhya Pradesh 10 11

Gujarat 20 225

Maharashtra 10 3

Goa 1 0

Orissa 11 1

Chhattisgarh 10 0

West Bengal 2 0

Arunachal Pradesh 1 4

Meghalaya 3 2

Karnataka 45 26

Andhra Pradesh 22 597

Tamil Nadu 0 499

Kerala 0 8

Others 30 1

Total 178 1988

Load wise segregation

Load No. of OA consumers % of total OA consumers

< 1 MW 237 10%

1 MW--2 MW 873 37%

2 MW--5 MW 850 36%

5 MW--10 MW 239 10%

10 MW & Above 132 6%

237

873850

239

132

< 1 MW

1 MW--2 MW

2 MW--5 MW

5 MW--10 MW

10 MW & Above

OA consumers constitute 40-45% of volumes traded at IEX in DAM

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Dec-12

Mar-13

Jun-130

500

1000

1500

2000

2500

472 541 563

748

1128 11211211 1147

13081090 1116

1535

1879

2242 22592114.56399

DAM Monthly Cleared Volume

Month

Clea

red

Volu

me

(MU

s)

OA status in IndiaNorthern Region

States Buy Sell

Haryana

Punjab

Rajasthan

HP

J&K

Uttaranchal

Delhi & U.P.

East & North Eastern RegionStates Buy Sell

Assam & Bihar

Manipur & Mizoram

Tripura & Sikkim

Jharkhand

Arunachal Pradesh

Meghalaya

Orissa

West Bengal

Western Region

States Buy Sell

Madhya Pradesh

DNH & DD-UT

Gujarat

Chhattisgarh

Maharashtra

Southern Region

States Buy Sell

Andhra Pradesh

Karnataka

Tamil Nadu

Kerala

Apr 10, 2023

Open Access is a win-win solution for all stakeholders

Industries• Reliable power supply• Source cheaper power• Save the value of lost load (VOLL)

State utilities (Discom & SLDC)• Cost savings , need not have to buy

costly power as per merit order• Serve retail consumers better• Financial gains through open access

charges

State• Increase in per capita consumption• Revenue addition in terms of taxes• Build up in generation capacities • Employment generation• Promote industrial & economic

growth

Retail Consumers• Increased availability• Better reliability of power• Benefits trickle down to consumers in

terms of low prices of products

Open Access Benefits

In this presentation

• Open Access present scenario

• Barriers to Open Access

• Enablers for facilitating Open Access

• High Cross subsidy surcharge• High wheeling charges• Additional surcharge

Regulatory Risks

• Certain statutes in the EA 2003 (Section 11, Section 37, Section 108, etc.) exploited by States to impede open access

Legislative Impediments

• SLDC – unequipped or unwilling• Procedural Bottlenecks• Physical infrastructural constraints

Operational Hurdles

Barriers to Open Access

• Restrictive Open access regulations across states: Punjab: High wheeling charges (Rs 1.19 per Kwh) Haryana: Only RTC & peak hour procurement Gujarat and Haryana: Proposal by DISCOMS to levy additional surcharge West Bengal: OA charges are prohibitive; CSS not determined in

consistence with mechanism prescribed under NTP 2006 Tamil Nadu: Section 11 Maharashtra: OA applicants required to go through MERC UP/Delhi/ Jharkhand/East& NE: Resistance by utility

In this presentation

• Open Access present scenario

• Barriers to Open Access

• Enablers for facilitating Open Access

Open Access Charges

•Sec 42 (2) :“….Provided also that such surcharge and cross subsidies shall be progressively reduced in the manner as may be specified by the State Commission…”

•NEP, 2005 Sec 5.8.3: “…..the amount of surcharge and additional surcharge levied from consumers who are permitted open access should not become so onerous that it eliminates competition…….”

•Tariff Policy 8.3.2: Tariff to be +/-20% of cost of supply by 2010-11

Implement existing statutes in EA 2003 and NTP 2006

Legislative reinforcement

•Strengthen Sec 11, 37, 108 to remove ambiguity and facilitate OA

•Sec 11: OA to generators restricted by state government by citing extraordinary circumstances•Sec 37: State governments can direct LDC to restrict power sale outside state in lieu of maintaining smooth and stable supply•Sec 108: Directions of state government will prevail where public interest is involved

•Sec 42(4) : Define uniform methodology of determination of additional surcharge

•Tariff Policy 8.5.6: “…In case of outages of generator supplying to a consumer on open access, standby arrangements should be provided by the licensee on the payment of tariff for temporary connection to that consumer category as specified by the Appropriate Commission…”

Strengthen EA 2003 by expanding, restricting and/or clarifying scope under certain statues concerning OA

Streamlining operational hurdles

• Segregate ‘content’ and ‘carriage’ business• SERC to allow financial segregation of charges in terms of energy charge, network

charge, network loss and surcharges and insist Discoms to reflect these charges in their consumer bills.

• MERC has already taken a lead

• Equip SLDCs• Use revenue accrued to SLDC from OA consumers for developing Infrastructure, and

building capacity ……. 100 OA consumers with an SLDC imply a yearly revenue of appx Rs 7 crores. • SLDCc can embrace technology to automate processes for NOC issuance, energy

scheduling and energy settlement….IEX has introduced SLDC interface to help manage NOCs of customers in the state of Punjab and Tamil Nadu. Other states may adopt it too.

• Open Access Registry (OAR) • OAR will bring in transparency and facilitate faster transactions using automatic

rule-based open access clearance while removing manual discretions

OAR Framework

OA Applicants LDCsFinancial

Institutions (in future)

Regulators

Stakeholders

OAR

• Store information of all OA consumers•Store information on all OA granted• Info on inter-state corridor available for STOA as uploaded by NLDC/RLDC• Info on availed STOA corridor

Open Access Registry

• An integrated IT based system where all OA approvals will be kept as depository in electronic form and hence carry out the STOA Transaction.

• Registry will function as an interacting medium between the OA Participants, Trade Intermediaries/PXs and National/Regional and State LDCs.

• It will act as a central mechanism for consolidating and settling transactions instead of the NLDC/RLDCs settling each trade individually amongst themselves.

• The OA Approval will be held in the form of electronic accounts and the registry system revolves around the concept of paper-less trading.

• It maintains current status of NoCs, STOA Approval for participants and Record of Information will be available to CERC, System Operators, OA Customers, Traders and PXs.

Benefits of OAR

- No need to issue separate clearances for bilateral and collective- Reduced transaction cost and less paperwork- Information of beneficiary and transactions is readily available

- Easy record keeping, facilitates movement & safekeeping of approvals- Enabler for progressive, investor friendly image and easy customer interface- Reduces chances of fraud

- Faster and efficient scheduling and change over from one segment to another.- For OA accounting and database - Operated & maintained by independent body

Thank you

Carriage Charges in Select States at 33kV Level

STU Charge (Rs./ kWh)

STU Loss(%)

Wheeling Charge(Rs./ kWh)

Wheeling Loss(%)

Punjab 0.27 2.50% 1.19 2.26%

Tamil Nadu 0.082 2.95% (incl. wheeling loss)

- Included in state loss

Andhra Pradesh (CPDCL)

0.09 3.53% .096 3.92%

Gujarat (all DISCOMs)

0.03 4.81% 0.12 10%

Rajasthan (JVVNL)

0.37 4.20% 0.11 3.80%

Cross Subsidy & Additional Charges in States

Cross Subsidy Surcharge(Rs./ kWh)

Additional Surcharge(Rs./ kWh)

Punjab 0.85 (all voltage levels) -

Tamil Nadu 3.50 - 3.61 (Presently Sub judice in High Court)

-

Andhra Pradesh (CPDCL) 1.30 – 3.58 at 33KV (Proposed) -

Gujarat (all DISCOMs) 0.45 (all voltage levels) 1.35 (Proposed)

Rajasthan (JVVNL) 0.05 - 0.18 -

Cross Subsidy surcharge is a charge levied on OA consumers to meet the current level of cross subsidy within the area of supply of distribution licensee

Additional Surcharge is a charge paid by OA consumers to meet the fixed cost of distribution licensee arising out his obligation to supply

Landed Cost to Consumer accessing DAM at IEX

Landed Cost to Consumer(Rs./ kWh)

Punjab 5.80

Tamil Nadu 3.51

Andhra Pradesh (CPDCL) 3.75

Gujarat (all DISCOMs) 4.38

Rajasthan (JVVNL) 4.21

Assumptions:- Price at which procured from IEX = Rs.3/kWh - Consumer connected at 33kV level- Consumer load = 1 MW- Calculating landed cost after adding POC, STU & Wheeling Charges & losses, NLDC operating & application charges, SLDC charges, IEX transaction charges