The cross-subsidy surcharge for open access power consumers in Chhattisgarh should not exceed 20% of the average cost of supply of power, according to the state regulator’s recently issued amendment.

The Chhattisgarh State Electricity Regulatory Commission (CSERC)  issued the CSERC (Intra-State Open Access in Chhattisgarh) (Second Amendment) Regulations, 2023. These amendments aim to streamline the surcharge calculation process for intra-state open access in Chhattisgarh and will take effect from April 1, 2024.

According to the revised clause, the surcharge for intra-state open access will be determined based on the current level of cross-subsidy for the respective tariff category, tariff slab, or voltage level of the consumer.

The surcharge calculation will follow the average cost method, considering the difference between the average tariff for the consumer’s supply voltage and the average cost of supply for the licensee. However, there will be a maximum ceiling of 20% of the adjusted average cost of supply for that year.

For instance, if the cross-subsidy surcharge calculated for the fiscal year 2024-25 is ₹2 (~$0.024)/kWh, and the adjusted average cost of supply is ₹6.75 (~$0.082) /kWh, then 20% of the adjusted average cost of supply will be ₹1.35 (~$0.016)/kWh.

In this scenario, since the computed cross-subsidy surcharge of ₹2 (~$0.024)/kWh exceeds 20% of the adjusted average cost of supply (₹1.35 (~$0.016)/kWh), the cross-subsidy surcharge for the fiscal year 2023-24 will be ₹1.35 (~$0.016)/kWh.

Earlier, the Ministry of Power amended Electricity Rules, capping open access surcharges at 20% of the average power supply cost to promote competition and benefit consumers. This change was made to discourage power distribution companies from imposing high surcharges on commercial and industrial consumers, fostering a more competitive market with multiple suppliers and private generating companies.

Furthermore, the Commission has removed a clause (33 (6) (iv)) that previously stated the cross-subsidy surcharge for consumers procuring power through open access in the first control period of the multi-year tariff regime was levied at 90% of cross-subsidy surcharge determined by the Commission.

Similarly, they also omitted clause (33 (6) (v)), which previously defined a cross-subsidy surcharge of 50% for consumers procuring power through renewable energy-based generating plants.

The CSERC anticipates that these amendments will enhance transparency and clarity in determining the surcharge based on cross-subsidy levels and the cost of supply. By setting a maximum ceiling, the regulations aim to strike a balance between the interests of consumers and the financial viability of the licensees.

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