Haryana regulator stays open access curbs; Ramification across states likely

The Haryana electricity regulator has effectively stayed a move by the state government to deny short-term open access to industrial consumers in the state. The stand taken by the regulator is significant in the wake of an increasing tendency among states to raise protectionist barriers against open access — a key reform measure that enables consumers to migrate to electricity suppliers of their choice.

There have been similar moves in recent months by other states such as Karnataka and Gujarat to disallow electricity transactions under open access for industrial consumers, a move that industry chamber CII said could “negatively impact operations” of close to 200 industrial consumers across the two states.This, despite the Electricity Act 2003 mandating all states to allow open access to industrial consumers (those with more than 1 MW demand) from January 2009 and allowing access to the transmission lines of any utility across the country, subject to the payment of a wheeling fee by the user. Plus, consumers opting for open access have to shell out a cross-subsidy surcharge, or a monetary penalty, to the state distribution company for each unit of power contracted from outside the state.

The Haryana Electricity Regulatory Commission will take up the issue on May 27 for deliberations and a final order is expected subsequently. On May 14, the Haryana government had issued the order under Section 37 of the Electricity Act, 2003, that sought to deny consumers in the state the discretion to buy power from outside the state. Industrial consumers responded by saying they were facing huge financial loss as the maximum rate for buying power in the short term market through the open access route (either on the two spot exchanges or through bilateral deals) was below Rs 4, even as the Haryana distribution utilities’ price during peak load hours close to Rs 11 per unit.

Earlier moves by the Karnataka and Gujarat governments to disallow sale of electricity through open access ahead of the general elections, forcing industrial electricity consumers (consumption of over 1 MW) in Gujarat to buy power from within the state at Rs 6-7 per unit as opposed to the Rs 4-4.5 per unit quoted on the power exchanges. Karnataka, on the other hand, had restricted power sales within the boundaries of the State, and hence curbing the choice of power generators to sell power to consumers outside the state. States can not only mitigate their power shortages, but also reduce their power procurement costs by allowing open access to bulk consumers (those with more than 1 MW demand).

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