Additional Surcharge for Open Access Consumers Increased by 72% in Uttarakhand

The Uttarakhand Electricity Regulatory Commission (UERC) has set the additional surcharge payable by consumers availing power through open access at ₹1.94 (~$0.026)/kWh. The charges will be applicable from October 1, 2021, to March 31, 2022. This is a 72% increase from the ₹1.13 (~$0.015)/kWh additional surcharge applicable from April 1, 2021, to September 30, 2021.

The Uttarakhand Power Corporation Limited (UPCL) had filed a petition with the Commission, requesting it to determine the additional surcharge to meet its fixed costs.

UPCL’s Contentions

UPCL submitted that due to power purchase through open access by the consumers, the fixed power purchase cost of UPCL was stranded and had to be recovered from the open-access consumers as per provisions of the Electricity Act, 2003.

The total stranded energy due to open access was 107.04 MU, and the total open access energy drawn by the consumers was 117.68 MU between October 2020 and March 2021.

UPCL stated that the computation of additional surcharge was based on the average cost of the plants whose power was stranded due to open access.

Stakeholder Submissions

UERC sent a public notice inviting objections and suggestions, in response to which Indian Energy Exchange Limited (IEX) and Ambuja Cement Limited (AC) filed their written submissions.

IEX requested that UPCL optimize the power purchase cost by revisiting the existing power purchase agreements (PPA) with power stations with high variable costs that have outlived their useful life of 25 years. IEX also stated that the entitlement of plants does not have any bearing on the open-access volume. It is the available power that helps estimate stranded capacity, if any, due to open access.

Ambuja Cement submitted that the increase in additional surcharge was very high and requested the Commission to reconsider.

Commission’s Analysis

As per the UERC regulations, the Commission said that open access consumers had to pay an additional surcharge for receiving electricity supply from an entity other than the distribution licensee of their area.

The Commission examined the data submitted by UPCL on slot-wise energy surrendered, open access availed in that particular slot, and the calculation submitted for working out the average fixed cost during the period. The distribution and transmission losses were presumed to be 14% and 1.40%, respectively.

For arriving at the stranded cost of power due to open access consumers during October 2020 to March 2021, the Commission considered the weighted average fixed cost (₹/kWh) and the quantity of stranded power due to open access drawl (MUs). The Commission considered recovering the stranded cost over the next six months – from October 2020 to March 2021.

Based on the calculation, the Commission set the additional surcharge payable by consumers availing power through open access at ₹1.94 (~$0.026)/kWh.

UERC had recently passed an order to reduce the generic tariff of solar photovoltaic projects to ₹4.04 (~$0.054)/kWh in Uttarakhand.

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